Thursday, 30 May 2024

THURSDAY, 30 MAY 2024

THURSDAY, 30 MAY 2024

The Speaker took the Chair at 2 p.m.

Karakia/Prayers

Karakia/Prayers

SPEAKER: Almighty God, we give thanks for the blessings which have been bestowed on us. Laying aside all personal interests, we acknowledge the King and pray for guidance in our deliberations that we may conduct the affairs of this House with wisdom and humility for the welfare, peace, and compassion of New Zealand. Amen.

Voting

Correction—Sale and Supply of Alcohol (Winery Cellar Door Tasting) Amendment Bill

SPEAKER: Members, on 29 May 2024, when the committee of the whole House was considering the Sale and Supply of Alcohol (Winery Cellar Door Tasting) Amendment Bill, the result of the vote on the Hon Dr Duncan Webb’s Amendment Paper 30 was incorrectly announced as Ayes 28, Noes 77. The correct result was Ayes 38, Noes 77. The record will be corrected accordingly.

PETITIONS, PAPERS, SELECT COMMITTEE REPORTS, AND INTRODUCTION OF BILLS

PETITIONS, PAPERS, SELECT COMMITTEE REPORTS, AND INTRODUCTION OF BILLS

SPEAKER: A petition has been delivered to the Clerk.

CLERK: Petition of Entrust requesting that the House change the Income Tax Act to enable it to become a listed portfolio investment entity.

SPEAKER: That petition stands referred to the Petitions Committee. Ministers have delivered papers.

CLERK: Government responses to the petitions of Mohamed Soliman, Kate Stone, and David Cumin.

SPEAKER: Those papers are published under the authority of the House. Select committee reports have been delivered for presentation.

CLERK:

Report of the Education and Workforce Committee on the review briefing on the 2022-23 annual review of the New Zealand Qualifications Authority

reports of the Finance and Expenditure Committee on the:

Controller and Auditor-General draft annual plan 2024-25, and the

Reserve Bank of New Zealand Financial Stability Report, May 2024

report of the Regulations Review Committee on the complaint about the E-Scooters (Declaration Not to be Motor Vehicles) Notice 2018.

SPEAKER: The reports are set down for consideration. The Clerk has been informed of the introduction of a bill.

CLERK: Appropriation (2023/24 Supplementary Estimates) Bill, introduction.

SPEAKER: That bill has been set down for first reading.

SUPPLEMENTARY ESTIMATES DOCUMENTS

SUPPLEMENTARY ESTIMATES DOCUMENTS

Hon NICOLA WILLIS (Minister of Finance): I present the Supplementary Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2024.

SPEAKER: That paper is published under the authority of the House.

Budget Documents

Budget Documents

Hon NICOLA WILLIS (Minister of Finance): I present the 2024 Budget speech, the Budget at a Glance 2024, the Tax at a Glance 2024, the Fiscal Strategy Report 2024, the Child Poverty Report 2024, the Budget Economic and Fiscal Update 2024, the Summary of Initiatives 2024, and the Estimates of Appropriations for the Government of New Zealand for the Year ending 30 June 2025.

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

Bills

Appropriation (2024/25 Estimates) Bill

Introduction

CLERK: Appropriation (2024/25 Estimates) Bill, introduction.

SPEAKER: The Appropriation (2024/25 Estimates) Bill is set down for first reading immediately.

First Reading

Hon NICOLA WILLIS (Minister of Finance): I move, That the Appropriation (2024/25 Estimates) Bill be now read a first time.

A party vote was called for on the question, That the Appropriation (2024/25 Estimates) Bill be now read a first time.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Bill read a first time.

Budget Statement

Second Reading

Hon NICOLA WILLIS (Minister of Finance): I move, That the Appropriation (2024/25 Estimates) Bill be now read a second time.

Tēnā koutou katoa. E mihi ana ki a Ahumairangi, ki a Tangi-te-keo, ki Te Whanga-nui-a-Tara. Tāne whakapiripiri e tū nei, e ngā tāngata whenua o te rohe, e ngā mema o te Whare Pāremata, kia ora. Nōku te Hōnore, ki te whakarewa i te Tahua mō te tau nei, rarau mai.

[Greetings to you all. Acknowledgments to Ahumairangi, to Tangi-te-keo, to Te Whanga-nui-a-Tara. Tāne the uniter, standing here, the indigenous people of this region, the members of this Parliament, kia ora to you all. It is my honour to speak to this Budget this year. Welcome.]

As I said in te reo Māori, it is an honour to announce this year’s Budget. The Budget delivers on key commitments. For the first time in 14 years, hard-working New Zealanders will get to keep more of their own money through our Government’s tax relief. We are shifting resources out of the back office of Government and into the front line. We are investing in healthcare, in schools, and Police. We are putting New Zealanders’ money where it can make the biggest difference. What’s more, our commitments are delivered within an operating allowance that is the lowest, in real terms, since Steven Joyce’s Budget in 2017. In other words, this is a fiscally responsible Budget—the most fiscally responsible in seven years.

On Budget day, it’s easy to get caught up in the analysis, the commentary, and the voices in the lobby. Actually, that is not what the Budget is about. This Budget is for everyday people getting on with their lives—the mums and dads rushing the kids to daycare or kōhanga, working hard, waiting in traffic and watching the petrol light flash again. This Budget is for the people whose doors I knocked on in the election campaign, who said $20 a week would be the difference between staying on top of the bills and being in overdraft. It’s for the man who told me he picked up a second job driving an Uber to pay the rent. It’s for every New Zealander, from every walk of life, who gives their best and wants a fair deal in return. This is a Budget for the squeezed middle of New Zealand—the shift workers, the people working two jobs, the families making sacrifices for their kids. Parliament’s focus today, and every day, should be the results we deliver for people like them. Because the right measure of success is whether Government is making a positive difference to the lives of New Zealanders and their families, not how many times it claims to care, and not how much money it spends.

The creation and passage of a Budget each year is at the heart of stable Government. This Budget is a team effort. In particular, I want to acknowledge and thank the Associate Ministers of Finance—David Seymour, Shane Jones, and Chris Bishop—who were heavily involved in putting this Budget together. It has benefited considerably from their ideas, advice, and input. The other Budget Minister in this process was the Prime Minister. I am grateful for his leadership, support, and wise counsel, as always.

I want to acknowledge how challenging economic conditions are for many Kiwis right now. New Zealand is experiencing a very difficult downturn. It suffered an acute cost of living crisis in 2022 and 2023. The Reserve Bank responded by raising interest rates. The official cash rate went from 0.25 percent to 5.5 percent and has remained there for a year. That hurts. I get regular updates from the Treasury about the state of the economy. What is apparent now, compared to six months ago, is that the current downturn started earlier, has been deeper, and is expected to last for longer than previously thought. In this environment, I feel for families and businesses across the country who are doing it tough. What I can say to them is that better times lie ahead. The economy is robust and it will recover.

Forecasts in the Budget update indicate that current weakness in the economy will reduce inflation pressures and lead to a gradual easing of interest rates. The Treasury expects the unemployment rate to peak at the end of 2024 and start of 2025, before beginning to fall. As interest rates ease, economic growth is forecast to pick up over the second half of this year and to continue into 2025. The Government’s job is to help that recovery, not hinder it.

In recent years, big Government spending has fuelled inflation. It has also caused a significant deterioration in New Zealand’s fiscal position. The operating balance before gains and losses (OBEGAL)—the difference between Government revenue and spending before gains and losses—has been in deficit since 2019-2020. For the most part, this is a result of continued spending increases. Some of these increases were temporary—in response to COVID-19, for example—but others were not. After stripping out large one-off expenses and adjusting for the economic cycle, Treasury estimates a structural operating deficit of around 1.5 percent of GDP this financial year.

“Structural deficit” is a technical term. To put it less formally, New Zealand has been borrowing to pay for the groceries. This borrowing has contributed to rapidly rising debt. In 2017-18, net core Crown debt was under 20 percent of GDP. It is now over 43 percent of GDP.

The solution is clear. Revenue and expenses must be brought back into balance. Debt must come down. This task is challenging. It has become even more challenging as the economic forecasts have deteriorated. Compared to the half-year update, the Budget update expects core Crown tax revenue to be lower by around $18.5 billion across the forecast period as a result of lower GDP and lower business income tax. That is a significant revenue downgrade, leading to a lower operating balance and higher debt.

To bring revenue and expenses back into balance, the Government has a choice. It can manage its spending, or it can raise additional revenue. Given that choice, this Government’s focus is squarely on managing spending. The key top-down tool for this is operating allowances—that is the amount set aside for discretionary new spending in each Budget. We are setting tight but realistic operating allowances in this Budget and in future Budgets. We intend to stick to them.

I said in the Budget Policy Statement that the final operating allowance for Budget 2024 would be less than $3.5 billion, which was the allowance set by the previous Government. The final allowance in this year’s Budget is in fact $3.2 billion. This is the lowest allowance in nominal terms since Budget 2018 and the lowest in real terms—that is, adjusting for inflation—since Budget 2017. Operating allowances for Budgets 2025 to 2027 will be even lower, at $2.4 billion per Budget. These are considerably lower than the allowances presented in the half-year update, which were set by the previous Government, and they are lower than those set out in National’s fiscal plan.

By comparison, the final operating allowances for the last two Labour Budgets were $5.9 billion in 2022 and $4.8 billion in 2023. Managing within future allowances of $2.4 billion will be challenging. Savings and reprioritisation will be a feature of future Budgets, just as they are in Budget 2024. They will be a business-as-usual activity.

The Fiscal Strategy Report sets out the Government’s fiscal intentions and objectives. These remain as they were in the Budget Policy Statement, with one addition: the Government intends to get back to surplus in 2027-28. This is one year later than forecast in the half-year update, which showed a microscopic surplus of $140 million in 2026-27. As I have mentioned, a weaker outlook for tax revenue has flowed through into lower OBEGAL balances and a higher debt track. The Budget update now shows a $3.1 billion deficit in 2026-27 and a $1.5 billion surplus in 2027-28.

Projections in the Fiscal Strategy Report show the Government is also on track to meet its other key objectives: to reduce net core Crown debt to between 20 percent and 40 percent of GDP, and to reduce core Crown expenses towards 30 percent of GDP. I would like to achieve those goals faster than the current projections show. But the Government is not planning an aggressive fiscal consolidation. We are taking a deliberate, medium-term approach and we will not overreact to movements up or down in the forecasts. We will be making difficult decisions and trade-offs to turn the fiscal situation around, get back to surplus and reduce debt, because that is what is required. But New Zealanders should know this: we will look after them along the way.

When analysing changes in the fiscal forecasts, it’s important to distinguish between economic forces beyond the Government’s immediate control and Budget decisions that clearly are in our control. Downgrades to the GDP and revenue forecasts fall into the first group. As I said, the weaker outlook for revenue—all else being equal—reduces the operating balance and increases debt across the forecast period. Also, because the economy is smaller, Government spending makes up a larger proportion of the economy. Consequently, the fiscal stance has been making, and will continue to make, a greater contribution to inflationary pressures than previously assessed. Those are facts. They would apply no matter which parties made up the Government.

Then there are the Government’s fiscal policy decisions. This Government has reduced the operating allowance in Budget 2024 and significantly lowered it for the next three Budgets. Overall, these lower allowances result in a cumulative total improvement in OBEGAL of approximately $5.5 billion across the forecast period compared to the allowances in the half-year update. That lower spending will improve the debt track and reduce inflationary pressure over the forecast period, compared to what would otherwise be the case.

In addition, modelling from the Treasury suggests that the impact of tax reductions offset by spending is also likely to modestly reduce pressure on interest rates. So, yes, the fiscal forecasts have deteriorated since the half-year update, but not as much as they otherwise would have in the absence of the Government’s Budget decisions.

The best illustration is this: if the Government had retained the operating allowances from the half-year update—those that were set by the previous Government—the operating balance would not return to surplus until at least 2031. The Budget allowances I talked about are a net concept. They encompass spending, saving, and revenue measures. The $3.2 billion allowance in this year’s Budget—as I said, the lowest allowance in real terms since Budget 2017—includes the cost of tax relief. This tax relief is long overdue. A visitor from the year 2010 would recognise the current personal income tax rates and thresholds, because apart from a new top rate, they are exactly the same. And, yet, since 2010, inflation has pushed up wages in nominal terms. And, as a result, people pay more of their income in tax.

The median full-time wage and salary earner now earns $73,000 a year and is in one of the highest tax brackets. A minimum wage worker can face a marginal tax rate of 30 percent. Fortunately, the parties in this coalition Government are the parties of the worker. We want working people to keep more of what they earn. We want to ease the cost of living pressures people have been under for so long.

From 31 July, personal income tax thresholds will rise. They will rise from $14,000 to $15,600; from $48,000 to $53,500; and from $70,000 to $78,100. This reduces income tax for anyone earning more than $14,000. From 31 July, the eligibility for the independent earner tax credit will be extended from $48,000 a year to $70,000 a year of income. This will help an estimated 420,000 additional people, most of whom will get the full $20 boost a fortnight. And from 31 July, the in-work tax credit, which helps support low to middle income working families with children, will be increased by $50 a fortnight.

Families with young children will also benefit from the new FamilyBoost childcare payment I announced in March. From 1 July 2024, parents and caregivers can get back up to 25 percent of their early childhood education fees, to a maximum fortnightly amount of $150. This maximum amount reduces for family incomes over $140,000 a year, and families with an income of $180,000 or more aren’t yet eligible.

This package of tax relief is identical in most respects to that set out in National’s election tax plan. The implementation date for the changes, other than for FamilyBoost, has been pushed out by around four weeks, after advice from Inland Revenue that payroll providers required more time to make the necessary changes. We did test this package. In particular, I engaged closely and constructively with my colleague David Seymour on the ACT Party’s idea of flattening the tax scale. This has a lot of merit but it was not possible to achieve in a way that benefitted people as the National plan did. It remains, however, an idea for the future.

In total, what will people get from tax relief? The Budget material contains various scenarios. For example, a couple earning an average household income of $125,000 a year will benefit by up to $102 a fortnight. If they have four or more children—four is a good number of children to have!—they could actually get slightly more than that, as they would still be eligible for Working for Families. And if they have children in early childhood education, they could get up to $150 a fortnight from FamilyBoost.

These have always been “up to” examples. People’s individual and family circumstances differ widely, so I encourage people to look at the tax calculator on the Budget website and enter their details. Analysis from Treasury shows that an estimated 727,000 households will benefit by at least $75 a fortnight, and 187,000 will benefit by at least $100 a fortnight. On average, households will benefit by $60 a fortnight, and households with children by $78 a fortnight.

I have occasionally heard people say in this House that tax relief only benefits the well-off. Well, that is not true of this tax package. Our changes to the in-work tax credit, and introduction of FamilyBoost, tilt the benefits of the tax package to low to middle income working families with children. Tax relief in this Budget puts $3.7 billion a year back into the pockets of New Zealanders. This tax relief is fully funded. Some of the funding is from revenue measures, but mostly it comes from savings.

The funding is broadly as set out in the National Party fiscal plan, with a handful of changes to reflect coalition commitments. These include, for example, a greater investment in tax compliance—an initiative proposed by New Zealand First.

There are other savings in the Budget. They go well beyond the funding of tax relief. The Government has chosen to stop some areas of spending, and re-deploy resources to public services where they will have a bigger impact. Ministers and their departments have gone line by line through the spending areas they are responsible for. This scrutiny has resulted in more than 240 savings initiatives. Some amount to a few hundred thousand dollars a year, while others save tens of millions. Some reduce the amount of funding available for a particular activity, while others stop things completely.

The biggest part of this Budget in dollar terms is not, in fact, tax relief; it is actually investment in public services. I am proud to tell the House that this Budget increases funding for hospitals and it increases funding for primary care. This Budget increases funding for schools, and this Budget increases funding for law and order to keep our communities safe. Two-thirds of the new spending in Budget 2024 goes to these three areas: health, education, and law and order, because this is a very targeted Budget. There is no money hose spraying cash around. Other targeted areas of investment include transport, defence, and disability services. But across the board, whether they have received additional investment or not, the Government has a clear expectation that public agencies must strengthen their focus on delivering results. We have set clear targets to improve results in health, education, law and order, employment, housing, and the environment, and we are focused on delivering them.

I want to take members through some of these areas of new investment. First, let me clarify that when I talk about additional funding, I am referring to operating funding over the next four years, plus capital funding.

I will start with healthcare. In Budget 2024, the Government is investing an additional $8.2 billion in the health system, including $665 million of reprioritisation. The single biggest portion of this is for Health New Zealand, with $3.4 billion earmarked for hospital and specialist services, and $2.1 billion for primary care, community, and public health. Budget 2024 also provides $1.77 billion to Pharmac—as my colleague David Seymour has previously announced—to ensure New Zealanders can access the medicines they rely on. It still staggers me that the previous Government funded a bunch of medicines until 30 June this year only. It staggers me more that filling this fiscal hole does not cost $700 million, as signalled in publicly available documents last year, but in fact costs $1 billion more than that. Thankfully, this Government has fixed that appalling problem.

The Budget provides $31 million to gradually extend free breast screening to 60,000 women aged 70 to 74. As the Deputy Prime Minister and the Minister for Mental Health announced last week, it provides $24 million to provide young people with free mental health counselling through the Gumboot Friday initiative. For those who seek to oppose that initiative, it is my view, and the view of our Government, that counselling will change many young lives for the better.

Funding in Budget 2024 will support hospitals and specialist services. It will also support community health providers, GPs, Māori health services, mental health services, and aged-care services. It will ensure our health system continues to be there for New Zealanders of all stages and walks of life.

In addition to funding in Budget 2024, the Government has chosen to pre-commit a total of $5.5 billion worth of new health funding against the Budget 2025 operating allowance, and another $5.5 billion against the Budget 2026 allowance. We have done this to give the health sector confidence to plan for the future, to ensure New Zealanders can get the healthcare they need.

Education is the great liberator. It is the great equaliser. It is the most enduring gift we can bestow on our children. To my mind, improving the results we get from our education system is the single most important thing we can do to improve the future productivity of New Zealand. Our Government will improve educational achievement, not through growing the Ministry of Education but by focusing our efforts on the classroom. In Budget 2024, the Government is investing $2.9 billion in schools and early childhood education, and that includes $441 million of carefully sought-out reprioritisation. This includes funding for kōhanga reo, playcentres, kindergartens, kura kaupapa Māori, special schools, intermediate schools, secondary schools, charter schools, and the work that goes on in classrooms across the country. This investment includes $1.5 billion to build new schools and classrooms, and to maintain and upgrade existing ones. We’re putting the funding in to fix the mouldy classrooms.

As announced previously by David Seymour, the Associate Minister of Education, the Budget provides $478 million to continue the Healthy School Lunches Programme for two more years, including $8 million to introduce a targeted programme for two-to-five-year-olds. There is $516 million in the Budget to support schools and early childhood education providers, $153 million to establish charter schools—as championed by ACT—and $67 million to implement structured literacy in all State primary schools.

In tertiary education, we are ending the failed policy that was first-year fees free. That policy failed its goal of lifting participation, and it failed to support students to complete their studies. In line with the National - New Zealand First coalition agreement, our Budget sets out a new approach of funding final-year fees free to encourage the successful completion of qualifications.

We have also recognised the vital role of on-the-job training by ensuring there is funding in place to keep key elements of the Apprenticeship Boost scheme going, supporting a range of employers to take on new apprentices. That initiative was left unfunded by the outgoing Government, and we are rescuing it.

This Government is committed to cracking down on crime and keeping communities safe so people can go about their lives in peace. In Budget 2024, we are investing $2.9 billion in restoring law and order, including $497 million of reprioritisation, other savings, and revenue. This Budget delivers on the commitment made in the National - New Zealand First coalition agreement to add 500 additional front-line police officers. Investment of $226 million will fund their recruitment and retention, and ensure they are properly equipped to do their jobs. A further $425 million will support front-line policing, including boosting police pay, and purchasing vehicles.

Our Government will always back the police. The Government’s commitment to restoring law and order means ensuring there are serious consequences for serious offenders. As previously announced, Budget 2024 will invest $1.9 billion in more front-line corrections officers, more support for offenders to turn away from crime, and more prison capacity, including an expansion of Waikeria Prison. The Budget also invests $69 million to address serious youth offending, including a military-style academy pilot, and continuing the Fast Track youth offending programme run by Oranga Tamariki and Police.

Budget 2024 provides $1.1 billion to address demand and cost pressures on the services funded by the Ministry of Disabled People – Whaikaha. This investment will ensure that disabled people can access the services, equipment and support they need. An independent review already under way into the disability support system will help improve its long-term financial sustainability. The Budget also provides $140 million to fund 1,500 new social housing places, delivered by community housing providers. We do not subscribe to the one-size-fits-all approach and we want to see a range of different providers delivering housing for those in need.

On coming into office, our Government was faced with a number of fiscal holes, with only short-term funding in place for what were valuable programmes. One of those was the Te Matatini regional model. Our Government is proud to have found funding of $49 million to support Te Matatini and bring kapa haka to life in the regions. This will help all New Zealanders join in the ongoing revitalisation of te reo Māori and Māori culture. Tihei mauri ora!

As previously announced, the Budget also provides $571 million for Defence Force pay and projects, including $99 million of reprioritisation. A portion of this additional funding will increase remuneration for New Zealand Defence Force personnel and the rest will go towards upgrading equipment and infrastructure.

I am determined to push forward with the social investment approach—using hard evidence to invest in what works to improve outcomes for vulnerable New Zealanders. Budget 2024 creates a tagged contingency of $51 million to accelerate social investment. Part of this is to establish a social investment fund to directly commission outcomes for vulnerable New Zealanders, and work with communities, non-Government organisations and iwi providers. Another portion will be used to support the standalone Social Investment Agency, which will be in place from 1 July this year.

It is part of the Kiwi character to want more for those whose lives are most difficult. Our Government understands that it is not enough to simply open our hearts to those in need. Truly solving the complex challenges of our most vulnerable requires that we apply our heads as well. The social investment approach will allow the Government to match good intentions with effective results. It will shift resources to the grassroots and drive innovation to more effectively help those in need.

Budget 2024 lays the foundations for a better performing infrastructure system. The Government is determined to address New Zealand’s infrastructure deficit, while also being a careful manager of public finances. In 2024, the Government is overseeing a record level of capital investment to deliver the infrastructure on which New Zealand’s growth depends. More than $68 billion is forecast to be spent on infrastructure by the Crown, Crown entities, and KiwiRail over the next five years.

I have already mentioned some of the infrastructure investment in this Budget—school property, Waikeria Prison, and Defence equipment and infrastructure. In addition, Budget 2024 invests $1 billion more to accelerate land transport projects including roads of national significance. This is on top of the $3.1 billion Budget 2024 commitment already signalled in the Government policy statement. Other transport investments include $939 million to repair roads damaged by last year’s severe weather events in the North Island, and $200 million for maintenance and renewals on the national rail network.

Budget 2024 also invests $1.2 billion over three years in the new Regional Infrastructure Fund, as championed by New Zealand First. The fund will invest in resilience infrastructure and regional projects that support economic growth. Among the first projects to be funded and announced today to get under way will be flood protection and resilience projects across the country. We are also providing funding to establish a National Infrastructure Agency to act as New Zealand’s “front door” to connect domestic and offshore capital to New Zealand’s infrastructure opportunities. What’s more, we’re fixing the Resource Management Act, so that instead of spending months and millions in court, those who want to build nation-changing projects can get on and build them.

The Government has ensured it has fiscal headroom to fund infrastructure needs. In Budget 2024, it has topped up the multi-year capital allowance by $7 billion. As a result, $7.5 billion remains in the allowance to be allocated to future projects, so New Zealanders can have confidence that where capital investment is needed from the Government, we can fund it.

The Government will invest responsibly to support New Zealand’s transition to a low-emissions economy and climate-resilient future. I have mentioned, for example, climate resilience projects funded from the Regional Infrastructure Fund. Around $2.6 billion of climate initiatives funded from the previous Government’s Climate Emergency Response Fund will also continue because we have judged that those projects represent good value for money. New Zealand remains on track to reach the emission reduction goals of our first emission reduction period. Later this year the Government will consult on plans to deliver emissions reductions over the second emissions budget period. Looking ahead, we expect the emissions trading scheme to play a vital role in reducing emissions. We will also consider future climate and resilience investment proposals through the normal Budget process, and manage them against Budget operating and capital allowances.

This year’s Budget is the clean-up job New Zealand needs. After six years of economic mismanagement, we are welcoming in a new era of careful Government spending, lower taxes for hard-working New Zealanders, and a strong focus on rebuilding the economy. Almost all the challenges New Zealand faces will be made easier if the economy grows faster. It’s how we give New Zealanders the improved choices, the better public services, and the higher incomes they deserve. Economic growth is what will give all our children a reason to stay here in New Zealand. In this Budget we are getting the country’s finances under control and establishing foundations for growth.

There is much work ahead. Lifting productivity will be our Government’s focus, whether that be through raising educational achievement, delivering better infrastructure, enabling investment, or any of the multitude of areas that need addressing. This Budget shows what is possible with care and with discipline. Our approach means New Zealanders can look forward with confidence, knowing the Government backs them. I commend this Budget to the House.

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

Budget Debate

Budget Debate

Rt Hon CHRIS HIPKINS (Leader of the Opposition): I move, That all of the words after “That” be deleted and replaced with “this House has no confidence in the Government because it is taking New Zealand backwards, it has no plan to tackle the cost of living crisis, it has failed to deliver on the promises it has made to New Zealanders, and it is prioritising the interests of landlords and property owners over hard-working Kiwis.”

There was one major test that Nicola Willis had to pass in today’s Budget: to demonstrate clearly that she was not borrowing to pay for tax cuts. And this Budget fails at the first hurdle: $10 billion worth of tax cuts; $12 billion worth of borrowing. You don’t need an abacus to figure out that this is a Government borrowing to pay for tax cuts. At a time when the Reserve Bank is trying hard to bring inflation down, the fiscal impulse in this year’s Budget is positive. The fiscal impulse next year, as a result of this Budget, is positive. In other words, at a time when the Government says it’s trying to help the Reserve Bank bring inflation down, it is doing the opposite. The fiscal impulse this year and next year, as a result of this Budget, is positive. This is a Government that is fuelling inflation through tax cuts rather than helping to get inflation back down and interest rates back down again.

Are New Zealanders getting the tax cuts they were promised? No, they are not: $250 per fortnight, the average family with children was promised by this Government, and what are they getting? Sixty dollars per fortnight under the tax cuts that the Government has delivered. But let’s look at some of the other people who are missing out the most. I was somewhat surprised by this one: superannuitants—a couple on superannuation—promised $13 a week by National before the election gets $4.30. That’s $2.15 per person. That’s less than a packet of chewing gum. I am astounded Winston Peters agreed to that. Perhaps he wasn’t paying attention when he realised that superannuitants were going to get a third of what they had been promised. The $250 a fortnight promised by National during the election campaign undoubtedly has not been delivered. The tax cuts that have been delivered won’t keep up with the increasing cost of living, and the changes made in this Budget will see Kiwis paying more. New Zealanders will be worse off.

Let’s go back to the Reserve Bank and what it said, just in the last week, about what’s keeping inflation higher for longer and run this Budget up against those tests. Rates are going up at astronomical levels; nothing in this Budget will tackle that. Rents are going up at high levels; nothing in this Budget is going to tackle that. The $2.9 billion in tax breaks for landlords has so far resulted in rents going up more. Insurance is going up because of the increase in natural disasters we’re seeing in New Zealand, among other things, and nothing in this Budget is going to address that. This is a Budget that is going to leave New Zealanders worse off. But let’s look at it against some of the other commitments that the National Party have made. They made much of this notion of fiscal cliffs—that time-limited funding was such a terrible thing. Are there new fiscal cliffs in this year’s Budget? Yes; there are seven. It turns out that Police operational funding is now a fiscal cliff under this year’s Budget.

The Government said that it was going to be increasing health and education spending at least by the level of inflation. Remember that? Nicola Willis said that during the election campaign: “at least by the level of inflation”. I think her calculator must be broken, because when early childhood education providers get an increase of just 2 percent and schools get an increase of only 3 percent—for some schools and not for others—that’s not keeping up with inflation. In fact, as a former Minister of Education, I can tell you this means that schools will be laying off teacher aides as a result of this year’s meagre Budget increase. That’s more jobs that are going to be cut because the Government is effectively cutting funding for schools and cutting funding for early childhood education providers.

Social services are going backwards. Health and education are going backwards. The increases in this year’s funding are less than those required. Te Whatu Ora made it very clear, before the election, to any incoming Government what was going to be required just to meet cost pressures, and this Government’s Budget does not meet those requirements. They have not allowed additional funding to meet their new targets that they have set; so they can have no credibility. No funding to meet the targets that they’ve set the health system; in fact, the health system is going to be expected to meet those at a time when its funding in real terms is going backwards. What does that mean? It means other front-line health services will have to be cut in order to meet the targets that the Government has set. And we have seen that before. We saw that under the Key Government. When targets for the health system were set and not properly funded, other front-line health services suffered as a result of that.

No responsible modern Government in 2024 would be cutting the level of investment that we make as a country in tackling climate change, and yet that is exactly what this Government is doing. One of the things you won’t see in this year’s Budget is accounting for the massive financial liability that is coming down the pipeline at us if we don’t meet our emissions reductions targets. Billions of dollars will need to be paid out by the New Zealand Government if we fail to meet our emissions reductions targets. Not one dollar has been provided for that in this year’s Budget. They are simply kicking that can down the road, increasing the liability the New Zealand Government will face in the future, potentially by billions of dollars, and just forgetting about that in this year’s Budget. And, in fact, they’re doing worse than that; they’re cutting the very things that would help us to avoid that future liability by decreasing our emissions. Cutting the initiatives designed to reduce our emissions is not the thing that responsible 21st century Governments do.

Another thing that the Government has been very quiet on is the issue of child poverty. I’m not surprised, because this year’s Budget makes it clear that child poverty in New Zealand is increasing, and it is going to continue to increase and the measures that the Government has implemented in this Budget mean more children are going to be pushed below the poverty line. Here’s another thing that responsible 21st century Governments don’t do: they don’t celebrate more children being forced below the poverty line, as this Government is. The Government has choices. The Government could choose to prioritise keeping New Zealanders in work. It could choose to prioritise lifting children out of poverty rather than forcing more children into poverty. It could choose to prioritise tackling climate change. It is not making those choices. Instead, it is choosing to prioritise tax cuts that are going to lead to higher inflation for longer.

Let’s talk about what that actually means for the recipients of tax cuts. A minimum-wage worker will be lucky to get 30c an hour extra in their pay as a result of the tax cuts. That’s not even going to compensate for the fact that the Government lifted the minimum wage by less than the rate of inflation in the most recent adjustment. Minimum-wage workers are going backwards under this Government. A Government that is pro-worker does not leave minimum-wage workers behind. A Government that’s pro-worker does not celebrate 27,000 more people going on to the Jobseeker benefit, which is what this Government’s Budget is forecasting. A responsible Government does not prioritise $2.9 billion in tax cuts for landlords while hard-working New Zealanders are worse off as a result of this Government’s Budget.

Backing out of their promises to New Zealanders, this Government is going back to the notion that if the rich get richer and everybody else gets pennies, somehow those at the bottom of the heap should be grateful for that. As the number of people being left behind in the modern economy grows and grows, this Government is reverting back to trickle-down economics—the idea that if you give more people at the top more money, everyone else will benefit; despite 40 years of very clear evidence that that simply is not the case.

There are plenty of other New Zealanders being left behind by this Budget, but, actually, it’s future generations that will be worse off: more children in poverty, and young New Zealanders working hard to create a better future for themselves. All those students who are in years 11 and 12, getting ready to do their NCEA exams this year, will now know that when they go on to tertiary education, they will pay more under this Government. This Government’s Budget stacks more cost on to today’s secondary school students for their study. There is no getting past that. Those same young people will also have more costs stacked on to them for public transport. They’ll have more costs stacked on to them in rent, because rents are continuing to go up and the Government is doing nothing about that. And, of course, those same students, if they’re in lower socio-economic areas, will find that the free and healthy school lunch programme they currently benefit from is turned into little more than an unhealthy snack under this Government’s Budget cuts, because, let’s be clear, that’s exactly what they will get.

Let’s compare that with what they’re doing for those on some of the highest incomes. A high-income person who has just one investment property will be getting an extra $2,085 a year in tax cuts, and an extra $15,000 a year in the tax breaks that are being dished out for landlords; $330, at least, a week better off compared to a minimum-wage worker, who gets just 30c an hour.

Where is the Government relying on this extra revenue? Well, they’re going to be taxing more on gambling. They’re going to be taxing more on tobacco. A Government that wants to fund tax cuts by increasing gambling and increasing the smoking of tobacco has certainly lost its moral compass. Every time you hear the Government saying, “We couldn’t afford that; we had to make tough choices.”, just remember: $2.9 billion in tax breaks for landlords was the number one priority that they had in this year’s Budget.

I want to speak to the Kiwis who feel forgotten and left behind by this Government: the parents who are working hard to create a better future for their children, who are finding that the public transport subsidies their kids relied on have been slashed, the free and healthy lunches programme is gone, and they are undoubtedly going to have to take more money out of their own pocket to make up for the shortfall in education funding as a result of this Budget.

To the disabled people who have been left behind by this Government, I want to say to them that we see you and we hear you, and we absolutely recommit to the notion that nothing about you should be done without you—something that this Government has failed to do.

I also want to acknowledge the tangata whenua and others who stand with the tangata whenua who are out on the forecourt of Parliament today, and I want to acknowledge Māori all up and down the country who have felt attacked, demeaned, and belittled by this Government. When Māori in New Zealand thrive, the whole country will thrive, and non-Māori New Zealanders have nothing to be afraid of from that.

To the reading-recovery teachers who are losing their jobs as a result of this year’s Budget: we see you and we hear you.

To the scientists who see their funding drying up and disappearing: we see you and we hear you, and we thank you for the contribution that you are making not just to this country’s future but to the future of our planet.

To the public servants who have been demeaned and maligned over recent months: we see you and we hear you.

To those who are working to prevent child exploitation who are finding their jobs disappearing: we thank you for the hard work that you do. You deserve better, and the victims of child exploitation absolutely deserve better.

To those who work to prevent family and sexual violence who are also finding their jobs disappearing: we thank you and we hear you as well.

To the children in the care system, who are finding supports provided through Oranga Tamariki—like lawyers—being laid off: we see you and we hear you.

To the people working to prevent suicide: we see you and we hear you.

To the Customs officers, those at the border, those working in biosecurity, who work to keep New Zealand safe, who have had their work demeaned by saying that they are “back office”: we see you and we hear you as well, and we thank you for the hard work that you have done.

To those who work so hard to eradicate Mycoplasma bovis: we celebrate the contribution that you have made, as does the primary sector. What’s very clear from this year’s Budget is that that Government would not have made the tough choice to eliminate Mycoplasma bovis; they just would have let it rip and let the devastation take hold in our primary sector as a result.

To the Department of Conservation workers and the WorkSafe staff, to those who are working on climate change, and to others who find their jobs under threat: we celebrate the work that you have done and we thank you for it.

To first-home buyers who are finding that the dream of first-home ownership is being ripped away from them by this Government: we see you and we hear you as well. You deserve better than you are getting from this Government.

To all the community organisations out there working on the front line, who asked for more funding certainty: we see you and we hear you. We also say that funding to your organisations should not be contingent on your support for the current Government.

Five-thousand jobs cut and counting—that’s just in the public sector—with tens of thousands of jobs across the country going under this year’s Budget. Rising unemployment. Higher inflation. More borrowing. A longer time to repay debt. Business confidence down. The infrastructure sector left in ongoing limbo, laying off staff who are leaving the country because of the actions of this Government. We absolutely recognise you.

To local authorities up and down the country who have been lumbered with the huge bill for upgrading water infrastructure, because this Government have simply abandoned any notion that they could have a role in fixing up the country’s water infrastructure: we recognise the pressure that you are under, and we particularly recognise the pressure that ratepayers are now going to be under as a result of this Government’s decision.

To those who support Smokefree Aotearoa and see that smoking has no role in New Zealand’s future: we recognise you too, and we will continue to fight for that.

There are tough choices to be made. This is a difficult point in the economic cycle. But this Government’s choices are making things tougher for the majority of hard-working New Zealanders. They are taking New Zealand backwards.

I note that Nicola Willis and Christopher Luxon said that they would resign if they didn’t deliver tax cuts. They’ve clearly chosen to prioritise their jobs over the jobs of the thousands of New Zealanders whose jobs are now at risk as a result of this year’s Budget.

On the number one test that was set for this Budget by the Government themselves, not borrowing for tax cuts, they failed. Let’s look at the numbers, stark as they are, again: $10 billion worth of tax cuts; $12 billion worth of borrowing.

A fiscal impulse that is positive—i.e., the Government’s injecting more stimulus into the economy at a time when the Reserve Bank is trying to bring inflation down. This Government’s Budget will result in interest rates staying higher for longer. The warnings issued by the Reserve Bank just in the last week have been completely ignored.

The big cost of living challenges faced by New Zealanders, like increased rents, like increased insurance, like increased rates—those things haven’t been tackled in this year’s Budget. The cost pressures faced by our public services: not addressed by this year’s Budget. Health and education: going backwards.

Future generations of New Zealanders: left undeniably worse off as a result of the changes made in this year’s Budget—future generations of New Zealanders who have been forgotten. The children being forced below the poverty line, and the young New Zealanders who will pay more for their education, more for their public transport, more for their rents: left behind by this year’s Budget. Their families who work so hard to support them: forgotten by this year’s Government Budget. The New Zealanders promised $250 a fortnight by this Government before the election, getting a fraction of that: forgotten by this year’s Budget.

New Zealanders could and should have had much better in this year’s Budget. It is a Budget that is taking New Zealand backwards. It is a Budget full of broken promises. It is a Budget that will leave the majority of New Zealanders worse off.

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

Rt Hon CHRISTOPHER LUXON (Prime Minister): Well, I have to say that that was quite a sad, pathetic, and embarrassing speech from Chris Hipkins, wasn’t it? I’ve got to level with you: I’m not sure he actually wrote that speech, and I’ll tell you why. It’s because Helen Clark is writing the foreign policy stuff, we’ve got David Parker and the “Piketty Pirates” writing all the tax policy, and we’ve got Michael Wood and Craig Renney doing everything else. But the one thing we know for sure is that Kieran McAnulty is writing Chris Hipkins’ valedictory speech, and what I’d say to Kieran McAnulty is that it’s not long, son—your shot and your time is coming.

Now, you can see that they’re not happy campers on the Labour side. You can see it up here, real close and personal, and you know that that’s the case when Carmel Sepuloni, the deputy leader, takes time off to go on Celebrity Treasure Island, which, when you think about it, is a bit like the Labour Party, isn’t it? It’s a lot less drama, but a lot more time on TV, when you think about it.

But for Chris Hipkins, his life is more like Survivor, because he has been hanging on to power, doing anything he can to maintain his role. Last year, he was campaigning against David Parker and against Grant Robertson on having a capital gains tax; now, he’s miraculously for it. Just six months ago, he thought that exploring AUKUS pillar 2 was a good idea, just like our Government did, and now, no, he’s not doing that.

But I’ll tell you what was interesting: last year, he was campaigning and supporting Michael Wood in Mt Roskill, and he’s not doing any of that at this point in time. I’ve got to tell you, Carlos Cheung, the great National MP who won it for National for the first time ever—he actually didn’t count on Chris Hipkins being his greatest ally for re-election in 2026.

I’ve got to say that it was a sorry, sorry sight, seeing Chris Hipkins deliver that speech. It was sorry, because here’s the truth: he had six years in power—six years in power—and, deep down, when he looks in the mirror each morning, he knows that he messed it up and he blew it big time. That’s what he did. Once again, as I said, that speech, as I’ve said before, illustrated Chris Hipkins: he is the arsonist that returns to the scene of the fire that he lit, and then he tries to criticise us as a fire brigade putting it out—and that’s exactly what happens.

But let’s remind New Zealanders as to the firestorm that Chris Hipkins and Labour created, because here’s the record—here’s the record. They hired 18,000 more public servants, and yet they delivered worse results. I’ve got to tell you that that’s a special and a unique skill set to be able to deliver that. He increased Government spending by 84 percent, and he taxed everyone a lot more in the process. He borrowed more. We went from $5 billion to almost $100 billion worth of debt. We’re now paying $9 billion in interest payments, and that’s $9 billion we don’t have to spend on schools and hospitals and infrastructure, and on our kids in New Zealand. Inflation hit a 30-year high, interest rates went right through the roof, we’ve had the economy in recession for four of the last five quarters, and we’ve got Kiwis losing their jobs and getting out of work.

I’ve got to say, regardless of the leader of the Labour Party and regardless of the finance spokesperson, it’s the same economic strategy and plan, and it’s pretty simple: it’s spend more, it’s borrow more, it’s tax more, and it’s worse outcomes. That’s what it’s going to be. The problem with that is that it’s pain and suffering for everyday New Zealanders—that is what the legacy of the Labour Government will be. New Zealanders are having to battle with high inflation, high interest rates, economic recession, and losing their jobs—losing their jobs.

So I want to say that it should have been a much shorter speech. It should have been much, much shorter. It should have just been two words—just two words—long, and the two words should have been “Thank you.” It should have been “Thank you, coalition Government, and thank you, Nicola Willis.”—“Thank you, Nicola Willis and coalition Government, for putting out the fire. Thank you for cleaning up my ungodly mess. Well done, coalition Government.” That would have sufficed, and that’s all it needed to be.

But I’ve got to say, wasn’t that a brilliant Budget—a brilliant Budget—from Nicola Willis? I’ve got to say that if the last few years have shown us anything, it’s actually that we need a caring, intelligent, thoughtful, hard-working finance Minister, and thank goodness we’ve got one in Nicola Willis—an outstanding finance Minister.

Our economic plan is very simple, with this Government. It’s about rebuilding the economy so that we can get rid of inflation and reduce the cost of living; it’s about restoring law and order so that Kiwis feel safe in their homes, their businesses, and their communities; and it’s about making sure we deliver better public services on education and healthcare. That is how we get New Zealand back on track.

But despite all the wittering we heard from Chris Hipkins and Labour, do you think they’re actually interested in restoring and rebuilding our economy?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: No. Do they support fast-track legislation so that we can actually get things done in this country?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: No. After spending $1.2 billion, do you think they’ve fixed three waters?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: No. Do they support roads of national significance and regional significance?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: No. Do they support reversing the oil and gas ban so we’ve got energy security?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: Do you think they support giving working Kiwis—the people they used to care about—tax relief?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: No, no—absolutely not. Now, we have more wittering from Labour and from Chris Hipkins, but do you think they’re interested in restoring law and order?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: No. Do they want to abolish the prisoner reduction target?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: Do they want to give more powers to police to go after our gangs?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: Do they support cracking down on youth offending?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: No. Do they support three strikes?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: No, no—they didn’t. That’s right—they didn’t do that. I’ve got to say that after all that wittering—again, a long speech, a sad speech, from Chris Hipkins—do you think they’re actually interested in delivering better public services?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: No, no, of course not—of course not. Do you think they supported banning the mobile phones in schools?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: No. Great idea—don’t know why. Do you think they support having an hour of maths, an hour of reading, and an hour of writing in our primary and intermediate schools?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: No. Do you think they support delivering structured literacy so our kids can learn to read?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: Definitely not—no. No—no way. No way. Do you think they support rights and responsibilities in welfare?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: No, they don’t do that. Do they deliver better health outcomes for Māori? They definitely didn’t do that.

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: No, and do they fund Pharmac’s medicines in the Budget properly?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: Definitely not. Do you think they got more security into our emergency departments? Shane Reti did that in a couple of weeks—yeah, Shane got it in there—and do you think they support public sector reform?

Hon Members: No!

Rt Hon CHRISTOPHER LUXON: No. So not one—not one—initiative do they support to make sure they’d rebuild the economy, restore law and order, and deliver better health and education.

But this Budget had three key objectives. The first was to cut the wasteful spending and the dumb programmes, the second was to invest in the front-line services that Kiwis value and need the most, and the third was to deliver tax relief to the squeezed middle. So I’ve got to say to you that this is a responsible Budget. This is a careful Budget. This is a Budget for the squeezed middle and it is a Budget for difficult times.

It is a Budget under pressure, and I’ve got to tell you, under pressure makes diamonds. Isn’t it a Budget that Nicola Willis did such a great job with, delivering so much for the New Zealand people? Look what’s being delivered—look what’s being delivered. There is more money for health, there is more money for education, there is more money for disability services, there’s more money for police, there’s more money for corrections, and there’s more money for defence.

Above all, I have to say that this is a good Budget because we are keeping our word and our promise to New Zealanders. Nicola Willis said it, but after 14 long years, this Government is delivering personal income tax relief to working Kiwis. It is fiscally neutral tax relief funded from savings and new revenue measures—exactly as we promised—within the spending limits that we campaigned on. From 31 July, 94 percent—94 percent—of all New Zealand households are going to receive some tax relief from this year’s Budget. That’s right—up to $102 for an average-income household, who may well then be eligible for up to another $150 of FamilyBoost support to offset early childhood education expenses.

This is great news. It’s great news for the squeezed middle, those low and middle income working families—the folk that Labour purported to care about, but don’t any more—battling to get through from pay cheque to pay cheque, who actually are going to benefit from tax relief in this year’s Budget.

So whatever the conditions, whoever is the leader, let’s just be clear: it’s more of the same from Labour: more spending, more tax, more borrowing, and worse outcomes.

Now, you heard it from Nicola Willis that our priority is to rebuild the economy, and this is a Budget that delivers on that objective. It’s a Budget that charts a pathway back to surplus, it’s a Budget with a plan to get the debt down, and it’s a Budget that shows that inflation is going to come down. We want it below 3 percent by the end of the year. We’ll have interest rates cuts after that so we can get the show on the road and get the country growing.

I’ve got to say that it is a Budget that when I talk with those families that I’ve sat with at budgeting services who are risk of losing their homes because of high mortgages and because of high inflation and because of ridiculous spending—they’re going to really appreciate that.

That’s a Budget, when I meet the families out in foodbanks who actually never imagined they’d be there and they’re there in record numbers because they can’t afford the groceries, because of the mismanagement from the previous Government—they’re going to love this Budget; they’re going to love it. This is a Budget that actually also creates the foundations for further economic growth. That’s what it does—economic growth to be created so we can end Labour’s recession.

We said it before but we are going to be an infrastructure Government. We are going to have world-class, modern, reliable infrastructure in this country because we are going to get Kiwis moving and we’re going to get this economy growing again. That’s what it’s about.

So there’s a lot of money for fantastic new roads of national significance. And we know the power of roads. We’ve seen great roads: the Waikato Expressway, the Kāpiti Expressway, Pūhoi to Warkworth—fantastic roads. But, of course, Labour and the Greens don’t like roads. I don’t think they even like tunnels—that’s the reality of it. But, more importantly, they don’t like building anything—they don’t like building anything. Do you think they actually built Auckland light rail? No. Do you think they got Wellington moving? No. Do you think they solved three waters with $1.2 billion of taxpayers’ money? No, they didn’t—no, they didn’t.

Well, here’s the deal. We’re going to get things done in this country because this is a coalition Government that knows how to build things and get things done. We want to see more wind farms. We want to see more solar farms. We want to see more geothermal. We want to see more natural gas. And so there’s going to be more homes, there’s going to be more businesses, and there’s going to be more infrastructure—more of everything that we need to get this show on the road and get this country growing again.

I want to put a serious challenge to the Labour Party and to the Green Party and just say very simply that if you cared about housing affordability—if you genuinely cared about it—if you genuinely cared about climate change, and if you cared about energy independence, rather than importing coal from Indonesia, you would back these reforms. You honestly would. You would back these reforms if you cared about those things. But you don’t want to get anything done in this country, and you just want to keep playing student politics. Well, we are serious people on this side, and we are seriously going to get things done.

Now, I have to say, this is a Budget that is about driving better value from every dollar that we spend. And you heard great examples, from Nicola Willis, that we spend on behalf of taxpayers and we will spend carefully and responsibly and with good discipline—that’s what it’s about. We know it’s not just how much you spend but it’s actually how you spend it and, importantly, what results and outcomes are delivered. That’s what matters to the New Zealand people—that’s what matters to them.

So I want us to take law and order, because we have some great Ministers doing amazing things to get more cops on the beat, to make sure we get more corrections officers, more funding for rehabilitation services, more consequences for serious youth offenders. Cracking down on our gangs—that’s what they’re doing. And we’re able to do that because we saved hundreds of millions of dollars in savings to actually support our fight to restore law and order. That’s what we did. So we’re targeting the programmes—the actual programmes—that work, and we’re shifting money from the back-office bureaucracy out to the front-line services.

And that means that we can make some real choices—real choices—in law and order, things like actually expanding rehabilitation services to remand prisoners. These are people with substance abuse and serious trauma in their life, and that’s going to be a success story because of the savings that have been made by this Government to support those front-line services.

We can take education, because, I’ve got to tell you, Erica Stanford is doing a great job fighting for the future of our kids and making sure they get the education they need. She’s done an incredible job moving hundreds of millions of dollars from the back office of the Ministry of Education out to the front-line services.

We’ve got nearly $1.5 billion in this Budget to fund and build new classrooms and maintain existing ones—well done—$67 million to support structured literacy so we teach our kids the same way, every day, how to read and how to write. We know it from the Labour side. We heard it this week, didn’t we, from Jan Tinetti that they don’t like structured literacy. No they don’t like it—they don’t like it. And if they could just get past the ideology and actually take an evidence-based approach to education, I’m telling you right now, the kids of New Zealand would be reading better, and the future would look so much brighter, wouldn’t it?

And I have to say, evidence in education kind of matters. It really matters because, actually, when you look at it, the evidence from Chris Hipkins’ time as education Minister for five years in the last Government is pretty bad. Half the kids show up at high school not ready to go. They don’t know the basics well enough. Over half the kids aren’t attending school 90 percent of the time—incredible. And, actually, we just lost half a decade with Chris Hipkins as education Minister where nothing was achieved.

I want to talk quickly about health in the time that I’ve got, because we are going to have to fix the healthcare system too—that’s what we’re going to do. Labour spent truckloads, didn’t they? They spent truckloads. They restructured the healthcare system, they moved the bureaucracy around, and they shuffled paper and people. But, at the end of the day, what have we got to show for it? What have we got to show for it? Nothing. Nothing—that’s right. We’ve got increased wait times for emergency departments, and we’ve got increased wait times for first specialist appointments and elective surgeries. We’ve got less kids being immunised under the age of two, so they’re not protected, and we’re going to fix it. And we’re going to have Dr Shane Reti shake it up, and that’s what he’s going to do.

And that’s why we’ve brought back targets; that’s why we’re changing the leadership. And, in this year’s Budget, we are going to make big investments that are focused on the front line—billions of dollars to health to fund nurses and doctors so that Kiwis can get those services when they’re unwell and when they need it. So $1.8 billion to lock in permanent funding for Pharmac after Labour put those medicines at risk for everyday Kiwis.

I’ve got to say, it’s about the little things too, right? It’s about the little things. The $24 million going to Gumboot Friday to help 15,000 kids—15,000 kids who desperately need those free counselling sessions—so that they can move forward with their lives and deal with their mental health challenges. We are all proud of that commitment on this side—we are proud of that commitment. So what did Labour say about that? Oh, they said it was tin-pot politics. They said it was disturbing. They said it diminished trust in the democratic process. Well, here is what I think erodes trust in the democratic process: it’s a useless previous Government that didn’t deliver anything for New Zealanders. That’s what erodes trust in the democratic process. That’s what does it. What Labour didn’t learn in six years was that Kiwis don’t just want activity; they want achievement, they want delivery, and they want a Government to get things done, and that’s what we’re doing here.

I have to say, I want to thank our coalition partners, who have worked incredibly hard on this Budget—incredibly hard. David Seymour and the ACT Party—we have a Minister who actually gets that red tape is creating our obstruction economy, and he gets the impact that charter schools are going to have and the difference they’re going to make for kids across New Zealand. And it’s great to see those things funded in this Budget.

And we’ve got Winston Peters and New Zealand First. And I want to say thank you for what they’ve done as well, because we finally have a foreign Minister, now, who’s out there championing for New Zealand on the world stage after three years of Labour sitting here at home and sitting on their hands. And New Zealand First believe in economic development—they do. And that’s why we’re seeing a regional infrastructure fund that’s going to deal with things like flood protection. We’re seeing them make sure that they accelerate fast-track consenting so we can get things done. So I want to say thank you to our partners there as well.

Well, I have to say, this is a very good Budget. It is a very good Budget from a very good finance Minister, Nicola Willis. And we are so proud of her—we are so proud of Nicola Willis. And, I’m telling you, New Zealand is damn lucky to have her in this role, and she is an excellent finance Minister, and we just saw that today.

This is a careful Budget. This is a Budget for the squeezed middle. This is a Budget for difficult times. And it’s a Budget that, despite the mess and the difficult economic conditions that we’ve inherited from the previous Government, actually has still found a way to spend more money on health, more money on education, and more money on law and order. And those are the things that New Zealanders care about. Those are the things that New Zealanders want us to deliver for them. So it is a Budget that is actually for all those Kiwis and all those families who’ve had to tighten their belts over the last couple of years, all those businesses that have done the same thing, and now they have a Government, with good financial management, tightening its own belt as well.

Can I just say in closing, this is a Budget that starts to restore the promise of New Zealand, and that promise is pretty simple: it’s that if you’re prepared to work hard in the best country on planet Earth, you deserve and should be able to get ahead. So I just say to you, this is a Budget that is going to start to get New Zealand back on track.

Hon MARAMA DAVIDSON (Co-Leader—Green): E te Māngai, tēnā koe. Today, the coalition Government showed us their true colours. It’s a mean and nasty Budget. That’s what it is. They had the choice to be bold and invest in our people and our planet, but instead they have actively undermined our collective ability to support each other and restore Papatūānuku. This is a cynical Budget that serves mostly the short-term interests of a few and ignores the long-term challenges that we all face in Aotearoa. The Government has chosen to preserve poverty and remain a not-so-innocent bystander to the unfolding climate crisis with an incredibly unambitious Budget for Aotearoa.

We have everything we need in Aotearoa to make sure everyone—everyone—can live in dignity. There is enough to make sure everyone—everyone—has a warm, dry, affordable, accessible home, food on the table, and enough money left over at the end of the week to not worry about the power bill. And we have everything we need to restore our living systems, our biodiversity, and take climate action that our mokopuna will be proud of.

The Government could have chosen to rebalance how we share the benefits of this country’s success, shifting the tax burden from those who earn the least and making sure that those accumulating huge wealth pay their fair share—just their fair share. It could have. This Government could have put in place an income guarantee so that, no matter what, everyone has what they need to live a quality life—everyone. It could’ve given everyone free dental care—it could have—and yet the Government has prioritised trickle-down tax cuts for landlords. We see who they are governing for; it is for their uber-wealthy mates.

But the Greens are here for the many and not just the few. We are here for Te Tiriti o Waitangi, and we are here for Papatūānuku. Mō te mana o te Tiriti, mō te oranga o te taiao, mō ngā tūmanako o ngā Tamariki me ngā mokopuna. [For the mana of the Treaty, for the welfare of the environment, for the aspirations of our children and our grandchildren.]

It is plain to see in today’s Budget that the coalition Government simply does not care about environmental impact, does not care about everything that sustains us—our forests, our beaches, our rivers—and that mean so much to all of us as citizens, as people of Aotearoa. They have gone and neglected them completely in this Budget. That is a choice this Government made. Four thousand—4,000—of our native species are threatened with extinction, and yet there is no new funding to protect them. It is a tragic truth that based on the choices that Government has made in this Budget, our taonga indigenous native species are a step closer to extinction—for shame.

They are cutting the conservation budget—cutting it. The Department of Conservation manages a third of our country’s whenua, and yet funding is being cut in the Government’s relentless, ideologically driven push to reduce public spending, regardless of its consequences. Initiatives that protect the environment have been gutted to free up money for tax cuts, and the waste disposal levy is being hijacked for use in disaster response.

Sixty-three thousand—63,000—tamariki woke up in poverty this morning in Aotearoa. Now, this Budget could’ve changed that, could have ended children living in poverty in this country. But this Budget will not do that. The Child Poverty Report, a whopping four whole pages—that’s right, a whopping four whole pages is the Child Poverty Report—is clear that this Budget will see child poverty flat-line. That’s what this Government chose. They chose for child poverty to flat-line—not to eliminate it, not even to lessen it, but to just accept it as it keeps going. For shame.

This Government could have invested in many more public houses so that every single child in Aotearoa can thrive. It could have lifted the incomes of the people who need it the most, those who are relying on our social safety net. But the Government has chosen not to make that vision a reality. A warm, dry home—pretty simple—is the foundation of a good life, and the Government’s choices in today’s Budget are undermining that foundation, bulldozing the basic needs of our communities. They have taken funding away from emergency housing. They have gutted the funding for the homelessness services and the Homelessness Action Plan. They have stopped the plan to contract new transitional housing places for rangatahi—

Hon Member: For young people—yep.

Hon MARAMA DAVIDSON: —wait—they have stopped the funding and have pulled back some of the previously granted funding for youth and rangatahi transitional housing. The cruelness and the nastiness of that. The cruelness and the nastiness of pulling away funding from the very people—the very people—who need it the most. What is youth and rangatahi housing if not crime prevention, if not health services, if not education services? They have gutted funding for housing—for Māori housing, for public housing, for youth transitional housing—and they’re building more prisons.

What is a Budget, if not cruel and nasty, if it takes that funding away from the very people—the very people—who are struggling the most and instead puts it towards landlords—to landlords? This Government has slashed $40 million from the fund that was supposed to support iwi and hapū to build Māori housing. It was in the last Government, and I have always commended this, that finally— finally—we got to see Māori housing, Māori-led housing, which we know is one of the key ways to ensure that Māori, disproportionately represented among those who are homeless, those who do not own a home, those who do not have housing stability—has to be led by Māori housing. They are slashing it.

So this Government wonders why so many people march in the streets, this morning and many other mornings, against this Government’s onslaught against Te Tiriti and against whānau Māori? They should not be surprised. This is not a theoretical constitutional argument. This is a Government that disempowers te iwi Māori and takes back funding that was supposed to build new homes. And what are they doing with that money instead? They are giving tax cuts to landlords—the same landlords who they are empowering to evict tenants more easily. So not just a whole lot more billions but a whole lot more power from those who have been denied their power and giving more power to those who already had enough. That is the cruel and nasty Budget that this Government is announcing today.

This Government has chosen to make homes colder and more expensive to heat. They have chosen to cut $178 million from the Energy Efficiency and Conservation Authority—EECA—which funded things like the hugely successful Warmer Kiwi Homes programme. They have cut funding specifically for the outreach programme to target hard-to-reach households and for efficient hot-water systems that would have lowered the cost and the burden on the electricity grid that they seem to be so concerned about. Remember a few weeks ago when the Government said we were going to have power cuts on a cold morning? Well, today, they have cut the funding to exactly the work that would have prevented this from happening. Their beloved power grid—they’re cutting the funding to help take the pressure off it.

This Budget is vandalism. And, speaking of vandalism, this Government has slashed and burned almost all climate and environmentally minded policy while pouring coal and oil and gas over the roaring climate-crisis fire. That’s what this Government is doing.

Today’s Budget has seen funding from almost every major programme in the emissions reduction plan absolutely gutted. Mātauranga Māori - based approaches to agricultural emissions reduction—gutted. Agricultural emissions pricing policy work—gone. The development of a circular economy and bio-economy strategy—cut. The Community Renewable Energy Fund—slashed. The just transitions work programme—gone. The Transport Choices programme to reduce vehicle kilometres travelled—gone. Public transport workforce sustainability funding—but who needs bus drivers if you’re also actively encouraging people not to catch buses? So I get where this Government is coming from with their vandalism towards our climate and our people.

The Minister of Finance says she expects the emissions trading scheme to play a bigger role, but they’re even cutting the funding for that. The essential support for market governance work is gone. Now, that is opening the door for carbon-credit cowboys to ride on in. What remains of climate action funding is not nearly enough to meet the scale of the climate crisis—not nearly enough. That is the short-term, narrow-minded cruelty and vandalism of this Budget for our people today and for generations to come.

The Minister of Climate Change needs to front up and explain how big a chasm his Government has created in the emissions budgets that it signed up to and how they plan to make up for that. Greenhouse gas figures released by Stats New Zealand today, showing further decreases in emissions, are proof that the green initiatives of the last two terms were working. The green initiatives of the last two terms were finally getting us in the direction that this country needs to head in. And I’m really not amused by the comedy that that side—that Government—thinks climate change is. They’re amused. But, yeah, show yourselves. This Government is showing itself, showing itself for the disregard that it treats our generations and future generations. So keep it going—keep it going.

Greenhouse gas figures released by Stats New Zealand today—oh, I’m repeating a paragraph, but it’s worth repeating because those are the initiatives that the Greens have worked on for the past two terms. And Government investment in decarbonising industry, together with a higher carbon price, drove the reduction in industrial emissions, while the Clean Car Discount made a massive dent in our overall emissions—a massive dent—stuff that was actually starting to work. When it comes to climate change, Governments are defined by their choices, and this one is choosing to bury its head in coal.

The single most important thing that this Budget has shown us is that we must make this a one-term Government. Their visionless, cynical, cruel approach cannot last. We must be bold and loud about the fact that Government can and must make better choices. Governments can choose to end poverty, to fight climate change, to protect Papatūānuku. This Government has shown that they will not make those choices. We can create an Aotearoa that all of us deserve. I want everyone who cares for our people and our planet to know that every day—every single day—the Greens will stand up in this Whare to show that a better Aotearoa is possible.

So we say to every parent and whānau who skips a meal so their tamariki can eat, to every student shivering through winter without the means to turn the heater on, to every teacher and nurse and bus driver working too long for too little pay to look after our communities: we see you, we hear you, and we will always fight for you in these halls of power. And just as we will fight for you, we need our people to join in with the struggle. Make yourselves heard, be loud, and be strong. The destructive and cynical things this Government is choosing to do are not inevitable. They do not need to happen. We can choose to improve everyone’s lives by changing the rules and rebalancing the way that we share wealth and power.

This Budget will leave people out in the cold and leave our planet to burn as emissions rise and our window of opportunity to combat climate change closes. Aotearoa can do better. We deserve better. We have enough to go around to ensure everyone has food to eat alongside a warm place to call home. We can and must choose to prioritise people and planet over the profit-thirsty industry interests that seem to have hijacked the direction of this Government.

I tried to have a look in this Budget for anything, and I actually feel aroha for Minister Karen Chhour, who I know is serious about her work to prevent violence. If anyone on the Government benches can help me out, I couldn’t find a single new initiative for family violence and sexual violence prevention funding. I looked in Justice, Corrections, Ministry of Social Development, Police, Public Service, Health, Education—I couldn’t find anything. And I know that that is an area that was desperately in need of more funding—desperately in need of more funding. You’re slashing housing, public housing, rangatahi housing, Māori housing. That’s violence prevention. When people have a home, when people have incomes, and when communities are well and strong, we need to understand that is violence prevention.

But I haven’t even seen any more funding for the kaupapa Māori - led initiatives who have been begging for more and more funding for a long time. The evidence is there. The evidence is there about what works over a generation when it comes to the prevention of violence. I feel sad for Minister Chhour. I feel aroha for all of the stakeholders, all of the front-line workers, victims, and those who must have support to stop using violence. I feel sad for the trajectory of that mahi, and I am calling that out.

I also want to say, again, the Jobs for Nature funding, the impact on rangatahi in the communities who are finally feeling connected to looking after their whenua and their rivers; the joy on their faces, the sense of purpose, the sense of connection not just to their living systems but to their culture—incredibly important mahi. I’m so disappointed but not surprised that this Government does not care about the good work that had finally started happening and has not found any hope to be able to fund it.

These are choices—they’re all choices. We should never allow for any Government to pretend like we cannot afford to end poverty, like we cannot afford to end homelessness. We can. We just have to make those choices. Thank you, Mr Speaker.

Hon DAVID SEYMOUR (Leader—ACT): Thank you, Mr Speaker. You know, I gotta tell you, every time I hear Marama Davidson, I appreciate and miss James Shaw just a little bit more. Someone should call the physics department, because she actually managed to slow down time—the last five minutes of her speech felt like about 15. We’re here for the serious business of bringing down a Budget, and I’d like to acknowledge my fellow coalition leaders Winston Peters and Christopher Luxon; my fellow Budget Ministers and associate finance Ministers Chris Bishop and Shane Jones, and, of course, Nicola Willis, who I’ve watched work very hard to bring down her first Budget; and, most of all, my colleagues the Hon Brooke van Velden, fellow ACT Party Ministers, and parliamentarians.

This is a very important day. It’s an important day for New Zealand because finally—finally—there are some adults back in the Budget room. I lead a party that campaigned on doing three things: number one, to cut the waste; number two, to use the cuts in waste to cut the taxes levied on hard-working New Zealanders; and number three, to put more money into effective services and justice and defence and health and education and infrastructure. Today, we stand here bringing down a Budget that cuts the waste, that cuts the taxes, and puts more money into justice and defence and health and education and infrastructure, and builds foundations for growth for this country. That’s what I would call a result. I know you’re not supposed to speak this way—it sounds a bit Venezuelan—but I think that people who voted for ACT got fantastic value for money. It’s actually free to vote for us, and we’ve already saved you hundreds of millions, if not billions, of dollars. Is that a good deal or what?

This Budget is going to mean that people who have been watching the previous Government do less and less with more and more, just as they had to tighten their belts, can finally see a Government that is in tune with them. This Budget is not flashy. It happens against a backdrop where things are grim. I was talking to a principal of a medium-sized accounting firm the other day, and he told me many stories about what it’s like for businesses, because accountants usually see what’s happening in the economy first—them and real estate agents. He told me about a man who had run a successful business: he’d had 40 people working for him, and in the downturn of the last two years, he’d got to three people. He had sold his bed to pay the outstanding wages of those last three people before he moved to Australia. People know how grim it is out there, but they can also have some hope from the fact that we now have a Government that is not going to borrow and spend and drive more and more inflation that only makes it harder for people to meet their bills and get by. That’s the difference that we’re making here, and this allows people in positions like that to pay less tax.

You know, I’m always astonished when I hear people in the Opposition in the media—sometimes I wonder if I repeated myself—who say we’re “spending money on tax cuts”. Well, let’s just take this opportunity to explain very briefly how it works and doesn’t work. The Government can’t spend money it doesn’t have. Now, I know the Labour Party would see that as a new concept, but the Government can’t spend money on tax cuts, because tax by definition is how it gets money in the first place. So when we say that we’re cutting taxes, that is not spending—we are taking less of people’s money in the first place. I’m particularly proud of ACT, on behalf of renters and landlords alike, that we are providing relief by returning mortgage interest deductibility

I want to talk to the people who present this as some sort of radical concept as if it is not going back to the way things were in—you know, ages ago—like 2021. Income tax is levied on income, and income is a business or an activity’s revenue minus its expenses, and interest is a legitimate expense. So when you’re in business, you can deduct your interest costs from your tax bill. The radical, crazy thing was when Jacinda Ardern came out and said, “I’m going to tilt the market towards first-home buyers.” What happened, when she put more tax on landlords, is that rents went up $200 in three years, and the thing about rents is they are usually paid by people who don’t own their own house, which means that they are, by definition, a first-home buyer. We are taking that tax off landlords so renters will pay less rent so they have more chance of getting by without $200 increases in rent so they can save a deposit and build their first home.

Then we’re going to take less money out of people’s PAYE. You know, the number one leaflet that recruits people to the ACT Party is not anything that we’ve ever produced. I know the IRD is not supposed to be political, but they’ve got us a lot of supporters over the years, because the number one recruitment brochure for the ACT Party is a young person’s first PAYE slip. And they send them to me on social media—they say, “Far out! I always thought you guys were a bit crazy, but now I see what you’re saying. Can I sign up?” I’ve signed up hundreds of them. Well, maybe we are going to harm ourselves slightly because people will be paying just a little bit less tax—that average income household is going to pay up to $103 less tax a fortnight.

I know there’s people like Barbara Edmonds, I know there’s people like Chris Hipkins—people that earn $163,000 a year—they say, “Oh, that’s not much.” In fact, you know, I almost fell out of my seat. I need to talk to Brooke van Velden—I’ve got a health and safety at work issue! I nearly injured myself because Chris Hipkins appeared to be saying that the Government’s not cutting tax enough, and I wasn’t sure what to make of the situation. But what I can say is that we are cutting taxes in a responsible way by less than we are cutting spending, so we also get back to balance; so we also take inflation out of the economy; so we also allow the Reserve Bank to take pressure off mortgage rates, take pressure off interest rates, and allow Kiwis to have a bit more money left at the end of the fortnight. That’s what our tax policy is about.

I’ve got to say I’m proud of what ACT’s Ministers have been doing right across the board. Workplace relations and safety: Brooke van Velden has absolutely taken a scythe to her own department’s waste, and you’ll hear from her in days to come just how much she’s managed to save in the Department of Internal Affairs. Yeah, it’s a bit of a confusing thing for some people, because most Ministers are out there competing to see how much more taxpayer money they can spend compared with the people next door to them. But ACT Ministers, for the most part, are competing to see how much taxpayer money they can save in their own departments. And what Brooke van Velden has done by cancelling the fair pay agreements—well, actually, that has multiple, multiple benefits because we don’t have to waste our time making national awards like it’s the 1970s or, actually, the 1890s again. But it also saved, I think, something like $65 million. She’s also saved money in the Department of Internal Affairs. Karen Chhour will be telling you, in time to come, how much she’s managed to save in Kāinga Ora, and it was really interesting to hear Marama Davidson be so disingenuous saying that she feels aroha for Karen Chhour. Well, I can tell you on this side of the House—I can say in full sincerity—we feel aroha for Karen Chhour. I’m not so sure people over there have lately.

But the other revealing thing about what Marama Davidson said is she felt sorry for Karen Chhour, because she didn’t have any extra money. That is an insight—an insight into the mind of Marama Davidson and the Green Party. They think the only way to get more results is to spend more money. This Government is all about proving that, actually, throwing money at every problem doesn’t solve them. Actually, that’s not true. The previous Government was a giant, expensive $100 billion experiment, proving once and for all that throwing money at every problem does not solve them. That’s right.

So what Karen Chhour has done is some amazing things. In Oranga Tamariki facilities, she is introducing uniforms for the staff. Now, people think, “Hang on—hang on, surely not”. This is the state under Labour—Oranga Tamariki was run by people who didn’t even have the pride, the respect, and the order and discipline to wear a uniform. You know, McDonald’s can do it; Warehouse Stationery can do it. But Oranga Tamariki, the department responsible for looking after the most vulnerable children in New Zealand, didn’t even have uniforms—it doesn’t cost much. But actually, by introducing some basic rules and discipline, she’s introduced locks on a few doors, which turns out to be cheaper than buying KFC to get the kids down when they escape on to the roof. Right across the board, Karen Chhour is doing more with less and doing it smarter. It’s just such a shame that Marama Davidson didn’t have the same ideas when she had a chance when she was in Government.

In fact, I’ve got to say, I look at these opposition MPs and I thought—I see Chlöe Swarbrick. She says, “I have great hope. I have dreams. We’ve got to change the world and make it better.” She was in Government six months ago. They had six years to do it, and they made everything worse. It’s like a kind of amnesia. I’m looking up through the beautiful glass ceiling of this Chamber trying to find those flying saucers that dropped them off on this planet, because I don’t think they’ve been here with us on Earth in recent times.

I look at Andrew Hoggard and the savings that he is making in the Ministry of Primary Industries while keeping us prepared for biosecurity threats. I look at Nicole McKee and what she is doing to get faster justice with smarter processes and investments in vital infrastructure like courthouses, because even the ACT Party thinks that having some decent courthouses and getting people fast justice is something that the Government should absolutely do and do well. That is our Minister for Courts, and she’s also getting rid of the Byzantine regulation that holds back people who just want to safely use firearms.

We also have a Minister for Regulation, because, fundamentally, this Government needs to create some foundations for growth. If I was to ask how we are going to ensure the foundations for growth, what it’s going to depend upon is getting the four things that make a country really fly right. We need to spend less time tied up in rules and regulations and more time being productive. I heard, just last week, that someone at an early childhood centre was actually told by the Ministry of Education that they had to wash nappies at 60 degrees centigrade—not 59, not 61—60 degrees centigrade. The fact that that is even possible tells you of the problems that we have across our economy, and that is why very soon the Ministry for Regulation, funded in this Budget, will commence the first sector review into early childhood education. Then we’re going to get into animal and veterinary products and medicines being imported nine years behind the rest of the world. Then we’re going to do finance. Then we’re going to do medical licensing. We’re going to deal with the red tape and the regulation that our Prime Minister calls the “foundations of obstruction economy”. We’re sweeping them away and replacing them with foundations for growth.

The other thing that you need, besides actually having some time to do some work as an economy that wants to grow—and by the way, where are Te Pāti Māori? We talk about work. They actually forgot to vote against the “White people’s Budget”, the “White people’s Budget” that is brought about by a Cabinet of 20 that has eight Māori members. Kia ora, Nicole McKee. Kia ora, Winston Peters. Kia ora, Shane. Kia ora, Casey Costello. Kia ora, Shane Reti. Kia ora, Tama Potaka. Our Cabinet, our Government—ko David Seymour ahau. Our Government—our Government is 40 percent Māori, twice as much as the rest.

But actually there’s a bigger error in what Te Pāti Māori say. You know what? It’s true that our Government’s 40 percent Māori, but it shouldn’t matter. It shouldn’t matter if you’re black, white, Cuban, or Asian. It doesn’t matter if your ancestors sailed here 1,000 years ago, like some of mine, or just got off a plane at Auckland Airport this morning to begin their journey. As New Zealanders in the 21st century, we are all New Zealanders. I was talking about productivity growth, and I just noticed the Māori Party seats, and that got me thinking about it.

Let me come back on to the topic. The second thing that you need, no matter what your ethnic background is, is infrastructure. A plumber that can do five jobs in a day is more productive than one that does three jobs and spends a whole lot of time sitting in traffic. A factory that breaks down and gets the repair van out there so the workers can keep working at that time is a lot more productive than one that has to wait a day for the parts to arrive. A tourism industry where people can easily drive from Auckland to the Bay of Islands to enjoy the wonderful beauty of our home in Te Tai Tokerau is more productive than one where people wonder, “Is this actually State Highway 1, or have I got lost?”.

That is why we need public-private partnerships. We need more foreign investment, which I’m proud to be leading as the Associate Minister of Finance, and we need city and regional deals and partnerships, along with the excellent investment of around $19 billion of capital in this year’s Budget—especially that led by Simeon Brown, our Minister of Transport.

There’s another thing that you need, beside a good regulatory environment and infrastructure. That’s education, and this Budget is filled with it. For one thing, we’re actually having a curriculum filled with valuable knowledge that one generation will pass to the next. And I read today that New Zealand children in the English curriculum are going to read about someone called Shakespeare and Witi Ihimaera! Who are these people? Well, soon everyone will actually know, because we’re going to teach our culture and our values as a country and pursue academic excellence. In fact, I can tell you, they were offering to teach something in the curriculum called “grammar”! That is what’s going to be in the curriculum so that the next generation, actually—I just saw Shanan Halbert, the former member for Northcote, looking really confused. That’s g-r-a-m-m-a-r.

We’re going to have charter schools so that communities can innovate, and when people say we don’t want to partner with Māori—I got a text message from my hapū just this week saying, “What do we have to do to get a charter school?”. I had to explain that you don’t just text someone; there’s a bit of a process, and I should probably remove myself from it. But anyone who believes for a moment—[Interruption] anyone that believes for a moment that this is not a Government that will partner with Māori and Pacific and anyone that has a good idea to engage students in education, learning a top-class curriculum who hasn’t heard about charter schools—they ain’t seen nothing yet.

The final thing that we need, besides better regulation, world-class infrastructure, and world-class education—this Government and this country need a Government that is as careful with other people’s money as the people who earned it. I think, when you look at a $2.4 billion a year allowance in the next three years, what you’re seeing is a Government that’s going to spend less than inflation and that’s going to spend less than population growth. It is going to do more with less. That is the real solemn commitment in this Budget that I’m so proud of—a Government that is making a solemn commitment, starting where we are, to do more with less every year from here on.

And, finally, I can’t help but refer to the conflict of visions that occurs every Budget. On this side of the House, we believe that New Zealanders are human beings with inalienable rights and universal human dignity in the right to make a difference in their own life and flourish the way that they would like. On the other side of the House, fundamentally, you don’t own yourself, you don’t own your life, and you don’t own your money. You are the prisoner of collectivism, and if you don’t act the right way for your particular type of person, woe betide you.

This is the Budget for the ordinary New Zealander who wants to make a difference in their own life and be the person they want to be, not the person someone else wants them to be. Thank you, Mr Speaker.

Rt Hon WINSTON PETERS (Leader—NZ First): Today, our country has just changed gears—from reverse and backwards to forwards and progress. We wish, in New Zealand First, to begin by recognising the work of the Minister of Finance, and her three Associate Ministers of Finance, because preparing a Budget in an economic crisis is an extraordinarily difficult undertaking, which most people don’t understand in this House, let alone in the country. A difficult undertaking when, on forecast growth charts, the International Monetary Fund last year had us—of the 159 countries they measured in terms of GDP growth, they had us 158. Now, that should have been a screaming disaster out there in the mainstream media. But no, they seem to be totally oblivious to these facts. That’s, by comparison, of course, the lowest this country has ever been since there’ve been measurements.

These Ministers faced a tsunami of debt, and so does the Government. As a consequence, an economy at serious risk, confronting international protectionism, with the tax take seriously down, having to confront major structural failure. New Zealanders are voting with their feet, leaving our shores in a mass, Old Testament exodus of people. That’s what we faced. The responsibility for that lies on that side of the House.

Now, look, turning to one’s own portfolio, to Vote Foreign Affairs, we can only advance the coalition Government’s ambition to improve the security and prosperity of New Zealanders through an active, well-resourced foreign policy. To that end, Budget ’24 will invest nearly $60 million in capital and operational funding for essential diplomatic infrastructure to support key international relationships, most particularly in our Pacific neighbourhood. It is a start, a first step, Ministers of Finance.

Over the next several months, the Ministry of Foreign Affairs and Trade will be benchmarking its diplomatic reach against countries we compare ourselves with in size and ambition, as New Zealand will more effectively advance its economic and security interests internationally. We will never get the outcomes in trade that we want unless we put a whole lot of firepower into the field. I’m certain that that’s what we’re going to do.

Now, having said that, I observed the response from the leader of the Labour Party, Chris Hipkins. At night, if anybody’s not able to get to bed, replay that speech—because it was going to put Mogadon totally out of business. After five minutes, he ran out of puff. It was noticeable. You know, you have to look at that and say to yourself, “I am psychologically studying what’s happening over there.” Their heads were down. Suddenly, they were dealing with a tsunami of correspondence that turned up this afternoon just before the Budget turned up. All of them looking downwards, not exuding confidence at all. Dejected, forlorn, guilty, inwardly repentant, but outwardly, mildly defiant. It doesn’t look like a party’s that’s going to be back in three years, does it? Or, for that matter, six years. Because—I’ll tell you why—it hasn’t got a leader.

Hon Rachel Brooking: Two years.

Rt Hon WINSTON PETERS: No, we haven’t. Oh, and, by the way, that member shouted out through the whole time and I thought to myself, “Gee, there’s not many people that can eat a banana sideways, but you could.” Unbelievable.

In 4½ minutes, he ran out of puff. He wrote his no-confidence motion not when he saw the Budget today—he obviously wrote it yesterday. Because he got up and gave a stereotype speech and went straight downhill. He lamented further borrowing—that Labour caused. There were crocodile tears for the elderly, having done nothing to advance the SuperGold card in the time they had it. He talked about—“As a former Minister of Education”, he said, “I can tell you”. I thought “What a brilliant opening line.” “As a former Minister of Education, I can tell you”—what he could tell us about was how the education standards deteriorated so rapidly under that sort of thinking. And then he referenced the cost of climate change, when, on building climate change resilience, they had done so, so little.

Then—it’s an extraordinary thing here, and I hope the mainstream media pick this up, if they’re still alive—he mentioned the failed trickle-down theory of economics. Now, that was fascinating. And he mentioned “40 years ago” about this trickle-down theory of economics and the 40-year period, but he forgot to say it was Labour who brought it in—after March 1984. Haven’t these people got a memory or conscience? Then, with seven minutes to go—he took all 30 minutes to say something else—he told New Zealanders that he was listening to them. You know, it’s reminiscent of the song by American rapper Shaggy, “It wasn’t me. It wasn’t me. It wasn’t me.” Just to be modern, right? “It wasn’t me. It wasn’t me.”

Hon Member: That’s not a country music reference.

Rt Hon WINSTON PETERS: No, it’s not a country reference—

Hon Member: Country music.

Rt Hon WINSTON PETERS: No, it’s not country music; it’s a rapper. You know—

Hon Rachel Brooking: Six minutes with no mention of the Budget.

Rt Hon WINSTON PETERS: Pardon?

Hon Rachel Brooking: Six minutes with no mention of the Budget.

Rt Hon WINSTON PETERS: No, I mentioned the background of the Budget in my first sentence. I mentioned the foreign affairs part of that Budget in my second page. Now, with respect, if you want to learn something, you’ve got to listen.

Look, we are sick and tired of failed university student union politicians. They couldn’t run the university school tuck shop. They get up here, they’ve never ever risked any money at all, and they’re spending billions of dollars and saying that they can do it. No, they can’t. Why, the last person that ran it—he’s heading off, having run the country into massive debt; he’s going to a university with massive debt.

They mentioned tobacco taxes. Tobacco taxes went up in December last year. Pay attention.

Ladies and gentlemen, then the next speaker was Marama Davidson—speak a bit of French?—sans Swarbrick. “Sans” means “without”. Because usually that party has co-leaders, so they get 10 minutes each. So something’s going a little wrong over there. Something’s happening over there. Sans Swarbrick—not 10 minutes each this time. No. Marama—

Hon Member: Scott’s starting a coup.

Rt Hon WINSTON PETERS: I beg your pardon?

Scott Willis: Est-ce que tu parles français? Je savais pas.

Rt Hon WINSTON PETERS: Oh, really? Oh, really? Fantastic! Well, I can see why you’re over there, on the other side of the House. Because we speak English in this country—a language that came from a small village in Germany all those centuries ago. It’s the language of commerce worldwide.

Now, back to the Greens. Facing 54 years, my friend, of never ever having made a Cabinet—54 years of never being in Cabinet. How can you belong to a movement? You look like a nice guy. You join a movement, and it’s 54 years in the wilderness. That’s what you’re going to be by 2026. Then, 2029 will be 57 years.

Scott Willis: I’m not worried about a one-term Government.

Rt Hon WINSTON PETERS: No, no, you’re not worried about it, no. But some of us came here to do a job, not to say, “Look, I think I’ll just change profession, I’ll land down in Parliament and maybe they’ve got a job for me there.” No, no—some of us here are on a mission. We’re out to save our country. We’re out to make it one of the greatest countries in the world again, which we once were.

Then—here’s the point—from the Greens you heard the modern version of Das Kapital, this utopian world, when she said this, straight out of the book itself, “To each according to their need”. That’s communism. Why don’t you say so, sunshine? Why don’t you tell the people that’s what you stand for these days? Don’t pose as Māori. Don’t pose as being green. Don’t pose as being anti - climate change. No—tell me what your economics is! And it’s communist. Because when you can get in this House and own that up, then nobody can protest for me saying it because that’s straight from the book itself. Or do a bit of reading before you come here next time.

Then, he entered the race to the bottom with Te Pāti Māori. All complaints, she did. No answers. No solutions. Descended straight from the absurd to the ridiculous.

These Green MPs, of course, are the highest aviation taxpayer-paid cost takers of all of Parliament. These Green MPs spend more time on aeroplanes than all the rest of us in terms of cost—about four times my party’s cost. Where are they flying to? What are they doing—because they never have a meeting. They never have a public meeting. No, they just go to the nearest bush and find a frog and say, “This is going be under grave endangerment”, and media rush off and put them on night after night. They never ever do anything out there. They have no constituency offices.

Hon Willow-Jean Prime: She’s the MP for them.

Rt Hon WINSTON PETERS: Oh, I see her there. What’s her name—from up north? Willow-Jean Prime. She wishes to defend them. I know why Willow would say that—because that’s what Willow doesn’t do either. When was the time Willow ever hit the ground hard and went around the place and put in some spade work for her party?

Hon Willow-Jean Prime: You heard wrong.

Rt Hon WINSTON PETERS: I’m sorry you feel that way because no matter what happens in the end, if you’re going to be on the side of the Greens in this contest, then the Labour Party’s finished—finished. The highest aviation costs of all MPs. You know something? Winston Churchill said there is nothing the Government can give that it hasn’t taken from you in the first place. I’m sure this will go down big with the ACT Party—there is nothing the Government can give you that it hasn’t taken from you in the first place. He also said, “I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” And that’s all you heard from them today—unbelievable.

Two-thirds of our new spending goes to health, education, and law and order. That’s our decisive reply to the fearmongering and scaremongering led by that crowd over there. Two-thirds of our new spending goes to health, education, and law and order and to the front line, not the bloated bureaucratic back line or the 17,000 new ones they got when they’re there with no productivity issues to argue for in their favour at all.

Tax relief in Budget 2024 leaves $3.7 billion in taxpayers’ pockets. Minister—it’s not tax savings here; we’re just not taking the money out of their pockets—money that they own—in the first place, right? We’re leaving the money with them. It’s theirs and theirs to keep. You know something? Core Crown debt—what we New Zealanders owe—had gone under Labour and the Greens from 20 percent of GDP to 43 percent of GDP. I’m repeating what the Minister of Finance has said, because this is the environment we’re in—trying to get by with degraded economic circumstances born of economic naivety in the extreme and massive PR boastfulness paid for by the taxpayers of this country on their way through.

Budget 2024 invests $1.2 billion over three years in what was once the Provincial Growth Fund but is now the Regional Infrastructure Fund. Oh, the name was changed by the Labour Party because they didn’t want to own up to the fact that the only thing they ever had success around was the Provincial Growth Fund. Now, regional projects for economic growth, flood protection, climate mitigation—which they never did but which we will do—and resilience projects are what our priorities are.

We all have our view on the previous Government’s economic performance, and many of these views, rightly so, in this House are not neutral. There is a view held recently by hundreds of thousands of New Zealanders, and their view is neutral because recently, hundreds of thousands over the last three years have left or fled this country under a Labour Government. That’s the most blistering commentary of how bad they were.

Shanan Halbert: Oh, tell us about the Budget.

Rt Hon WINSTON PETERS: “Oh, tell us about the Budget.”, he says. That’s the part that we’re redressing right now, right? Today the Māori Party organised a protest on Parliament’s forecourt and then didn’t even turn up in this House to find out what was in the Budget.

Hon Willow-Jean Prime: Here they are; they’re here.

Rt Hon WINSTON PETERS: No, they didn’t turn up to find out what was in this Budget—unprecedented—and if you’re their defender, they’re stuffed. If you’re their protector, if you’re their advocate, if you’re their defender, they haven’t got a hope in Hades. The highest cost of all MPs in terms of taxpayer-paid costs for MPs, but they couldn’t even bother to turn up. They couldn’t even bother to turn up—never been seen in this Parliament since 1854. Since 1854, never been seen. [Interruption] And you are not the youngest member of Parliament—you never were. Dobbie Paikea was. Let me inform you, Māori people, that Dobbie Paikea was here when he was 90 years of age, so stop showing off. Stop showing off and wearing a huia feather. Absolute dereliction of duty.

Rawiri Waititi: Talking about the oldest, not the youngest.

Rt Hon WINSTON PETERS: Yeah, well, I’m pleased you’re here because you make me look young. Take your hat off. Take your cowboy hat off. You make me look young.

Now, this is a quote from someone back when that is quite poignant and reflective. This person said this, “It is Kiwi-centred because significant decisions have been made and implemented that we are driving right in, right now, as a baseline to a nationhood concept that gives them, regardless of race and creed, a sense of belonging as Kiwis in this great country. Our challenge is in moving forward.” That is a quote from John Tamihere—now president of the Māori Party—in 2005.

Here’s another quote from someone back when, that is insightful and honest: “The rise of the Māori Party is unfortunate and frustrating. It is not Māori; Māori is a generic term. The group of people who have supported the rise of the Māori Party are actually tribal fundamentalists.” That is a quote from John Tamihere, the current president of the Māori Party. And another quote from someone back when, that is based in fact and quite applicable to what is happening outside there today, on Budget day, is: “The problem with the Māori Party is that it is led by a bunch of people who have done extraordinarily well out of protest activism, so they can tell their children why they should vote against things, why they should march against things, and why they should dislike others.” That is a quote from John Tamihere—the current president of Te Pati Māori—in 2005, and screaming out like you don’t do back on the marae in Taranaki won’t help you now. Nor that hat.

Another very factual quote: “It is quite clear. The Māori Party is built around new-age educationalists, reconstructionists in terms of history, and the academics and the new elite around the Treaty of Waitangi chequebooks. There is no case and no space in this country for separatists. I am very proud of my Ngāti Porou tānga—very proud of that tribal background. We do not ram it down other people’s throats, but we are very proud of it.”

Hon Member: Oh, here we go.

Rt Hon WINSTON PETERS: Oh, yes, here we go. Yes, we are going, and with the same quote, “Our being proud of it does not mean to say that we can coerce others into our way of thinking.” I will say it again for the lady from up north: “Our being proud of it does not mean to say that we can coerce others into our way of thinking. We have to acknowledge that this is a great land of diversity, difference, and opportunity.” Who’s it from? Take a wild guess. It’s from John Tamihere—the current president of Te Pāti Māori—in 2005. But the last quote is the most insightful of all. Here we go—

Rawiri Waititi: He’s lost it.

Rt Hon WINSTON PETERS: You’ve only been here five seconds, and where I come from and where you come from, you listen to your elders, OK? So just hush up, show some manners, show that you might understand where you might go in the future before they turf you out in five seconds’ time. Here we go again—it’s the last insightful quote: “The days when people could stand up and scream “treaty” and believe that they would get special rights have gone.” John Tamihere—current president of Te Pāti Māori.

Ladies and gentlemen, we suffered an indignity today, because the mass majority of Māori went to jobs, sometimes two or three jobs, today. They went out to work for their family and their children, alongside all other New Zealanders. All keeping our economy going—our hospitals, our education system, everything. They went to work today. But a few people decided to go outside this Parliament and not go to work. What I’ve just quoted to you today in both respects, to the president of the Māori Party, what he said then and what they’re doing now, is an example of hypocrisy that is palpable, profound, precise, predictable, preferential, punitive, and pathetic.

RAWIRI WAITITI (Co-Leader—Te Pāti Māori): Point of order, Mr Speaker. We have 20 minutes. I’m asking for leave from the House for a split call for Te Pāti Māori today.

Rt Hon Winston Peters: You can’t do that now!

SPEAKER: Just so the House is aware, Parliamentary Practice 19.4.2, I think, makes it possible for that action to be allowed. Therefore, expect two 10-minute calls.

HANA-RAWHITI MAIPI-CLARKE (Te Pāti Māori—Hauraki-Waikato): [Singing] Nō reira mauria mai ngā tamariki ki te kōhanga reo.

[And so bring the children to the kōhanga reo.]

I find it very interesting that one person in this Parliament is so triggered—so triggered—by me, so intimidated by me! Not once did I mention, not once did I say anything over here. I sat. So, if we want to go there, let’s go there. Nau mai ki tō mātou nei Whare, nau mai ki tōku nei marae, haere ki te kōrero atu ki ōku nei kaumātua, haere ki te kōrero ki ōku nei ruruhi, koroheke o Ngāti Rangi, nō ngā hau e whā o te motu. Haramai ki te kōrero. Moumou tō toto Māori, moumou tō toto Māori, moumou tō toto Māori.

[Welcome to our House, welcome to my marae, go and speak with my elders, go and speak with my matriarchs and patriarchs of Ngāti Rangi, from the four winds of the nation. Come and speak with us. Your Māori blood is wasted, your Māori blood is wasted, your Māori blood is wasted.]

I think Mr Winston Peters would be so proud of this young Māori wahine from Rāhui Pōkeka, one of the youngest members of Parliament. I say humbly—

Rt Hon Winston Peters: Oh, you said you were the youngest.

HANA-RAWHITI MAIPI-CLARKE: —“one of”—“one of”. Engari he aha? [But what?] I’m not intimidated. I’ve got no chips on my shoulder. And I find it—

SPEAKER: Sorry, I don’t want to stand; that would be inappropriate. But address the House, not a single member.

HANA-RAWHITI MAIPI-CLARKE: Āe, thank you. E whakahīhī ana a Winitana i a au nā runga anō i te mea koia te [Winston is proud of me because] he was one of the first signatures, actually, on Te Petihana Reo Māori tabled by my namesake Hana Te Hemara at Parliament. So I think he’s actually quite proud. He was once on the right side.

Engari hei aha tērā, hei aha ia, kei konei au ki te waha i ngā kōrero mō Te Pāti Māori i te ata nei. Hei aha ērā kōrero i tāmitia ki a mātou, ngā uri o Te Kōhanga Reo, ngā uri o tātou te iwi Māori. E tū ana ahau ki te waha i ngā kōrero o Te Pāti Māori nei. Ka tuatahi ake ngā kōrero ki tō mātou nei kīngi, a Kīngi Tūheitia Pōtatau Te Wherowhero te Tuawhitu, me tōna whare kāhui ariki. Rirerire hau, pai mārire.

Ko te kupu tuatahi i tēnei pō ko te reo whakamiha, ko te reo kōkiri ki tō mātou nei iwi, te iwi Māori i kōkirihia i ngā tiriti i te rangi tonu nei. Ka nui rā te mihi i a tātou, Te Pāti Māori, i takahi nei ki runga o Pōneke.

[But never mind that, never mind him, I am here to voice the statements of the Māori Party this morning. Pay no mind to those comments that oppress us, the descendants of the Kōhanga Reo movement, the descendants of our Māori people. I stand to voice the statements of the Māori Party here. These statements will first acknowledge our king, King Tūheitia Pōtatau Te Wherowhero VII, and his royal family. Peace and good will to all.

The first comment this evening is the voice of acknowledgment, the call to our people, the Māori people that progressed through the streets this very day. Many thanks to them from us, the Māori Party, that traversed Wellington.]

For some, it was Budget day, but for rest of us, it was activation day. I’m not here to talk about the Budget, because “What Budget?”—there’s nothing in it for us. The word “Māori” is not even mentioned once in this Budget within health, education, and police. So I’m going to turn to the kōrero that I gave today, which I think is more significant than this kaupapa here today, with our people and Te Kōhanga Reo.

In 1840, our tūpuna signed Te Tiriti o Waitangi, which asserted our rights, as tangata whenua, in our country. In the past seven months, I have witnessed nearly every single right be stripped away from us, from our reo, from our health, to our taiao, to our justice system, to Māori wards, housing, and I have never been more triggered or traumatised than last week, when this Government made a clear attack on the rights of our babies and mokopuna through whakapapa in section 7AA. This Government is trying to create another stolen generation, and we won’t stand for it. Christopher Luxon, Winston, Seymour, can you hear us? Can you feel us?

How extraordinary is it that kura and kōhanga reo have only been funded less than 1 percent over the last decade by successive Governments. Despite this approach, kura kaupapa continues to be amongst the highest performing educational systems in the country. Our tamariki and mokopuna are worth more than 1 percent. This House once talked about the extinction of Māori. In 1856, Dr Featherston said, “We must soften the pillow of the dying Māori race.” In my maiden speech, I said, “We are here.” Today, the wave spoke for itself. Now, the Government has underestimated this wave. Within my debates throughout the campaign election, I said the kōhanga reo generation is here, and there is a huge wave of us coming through.

Te Kāhui Raraunga shows us that we are growing and we are young, and this wave will not die out. For some of us who are sitting across, who are not growing young and who are not of this wave, tēnei te ngaru nui, te ngaru roa o te ao Māori te haramai nei [this is the huge wave, the long-lasting wave of the Māori world that approaches].

Today, I leave this message with you: kua roa nei tātou e huri tuarā ana ki te Moana Nui a Kiwa—for a long time, we have turned our backs to the moana. Me huri te anga o te kakau o te hoe, me aro ngā mata, ngā whatu ki te Moana Nui a Kiwa. [The shaft of the oar should turn, the face and eyes should turn to the Pacific Ocean.]

This fight isn’t just our fight; it’s everyone’s fight. It’s not French Polynesia; it’s Tahiti. It’s not the United States of America; it’s Hawai’i. It’s not New Caledonia; it’s Kanaky. We must move our waves together so that we embody our Hawaiki hou. We are the biggest embodiment of water on this planet. Tātou Te Moana-nui-a-Kiwa. There’s nothing to fear and lose from this wave, but everything to gain. This wave welcomes every generation and every race.

Kāore anō au kia kite i te pū o te raupatu, engari kua kite au i te mata o te pene—I haven’t seen the barrel of a musket, but I have seen the sword of the pen striking at the heart of Māori. We as a party may not get to change anything on paper or law yet, but we will continue to unite the hearts and minds of our people.

I leave this last message to my generation: they cannot stop this wave. These are the waves of our Hawaiki hou. Our responsibility, our job, is to unleash the floodgates, remove the barricades that stop us. We are moving, and we are moving strong. A kuia and koro—this actually connects to what has just happened before—will always hold their grandchild’s hand and move them into te āpōpō, but what we have to remember from our generation is that we have to hold the hands of our kaumātua and rūruhi—and I’ll hold Winston’s hand—to move them into an Aotearoa hou. We need to make sure that we are bringing our rūruhi, our koroheke, our kaumātua with us in places that were unimaginable—that were unimaginable—in their times; that they’ve fought with blood, sweat, and tears.

Ko tērā tō mātou nei haepapa, e taku whakareanga, kia kaua rā anō tātou e wareware ki ō mātou ruruhi, koroheke e takahi nei i tēnei whenua, kia hoki mai rātou ki tēnei Hawaiki hou hoki. Ko tātou tēnā.

[That is our responsibility, my generation, to not forget our matriarchs, our patriarchs that traverse this land, so that they too return to this new Hawaiki. That is who we are.]

Today was—kāore he kupu i a tātou, Te Pāti Māori, i te rangi nei.

[We, the Māori Party, have no words today.]

Not one fault, not one arrest, not one hiccup within motivating, mobilising, and galvanising the whole motu, from the top of the North Island to the bottom of the South Island, moving towards our tino rangatiratanga and our Hawaiki hou that leads us into the future.

Now, I know some may look at this and think, “What the hell is this girl on about?”, but I’m going to tell you this: I know who I am, I know where I’ve come from, and I know where I’m going. I know that might be intimidating for some people in this House, and some people might be harawene or pūhaehae of that. I’m telling you, there’s nothing to fear from us. And I am willing to bring you along with us.

Nau mai ki tō tātou nei marae; nau mai ki te reo Māori; nau mai ki te ao Māori; nau mai ki tō tātou nei Aotearoa hou. Tēnā rā tātou katoa.

[Welcome to our marae; welcome to the Māori language; welcome to the Māori world; welcome to our new New Zealand. Thanks to you all.]

RAWIRI WAITITI (Co-Leader—Te Pāti Māori): Kia ora. It is my absolute privilege to follow in the wonderful words of the youngest Māori wahine to have ever graced the Chamber, in Hana-Rawhiti Maipi-Clarke today. What a wonderful kōrero we’ve heard. This is where the future is. This is what this Budget should be focused on, and it does not.

What this Budget tells us is that Māori don’t matter, that we signed Te Tiriti o Waitangi but we continuously allow this House to assume that it has sovereignty and absolute superiority over Māori. Article 1 was the establishment of Kāwanatanga over your own people. Article 2 was the protection of the pre-existing rights of tangata whenua to their lands, to their homes, to their taonga.

Today, we made a declaration in the name of our mokopuna that we would no longer allow the assumption of this Parliament to have superiority or sovereignty over te iwi Māori.

Now, let’s look at a Kāwanatanga space. We now make up a million people. One in five people here in Aotearoa are Māori. I am one in a million. Did you get that one, Matt Doocey? You liked that one; you smiled. I am one in a million. I am 20 percent of this country. I expect nothing less than 20 percent of the total Budget in this country. That’s what I expect in a Kāwanatanga space. Not only that, on top of, if I make up 50 percent of the male prison population, then te iwi Māori should receive 50 percent of that budget. If I make up 64 percent of the female prison population, I deserve that proportion of the budget. If Māori tamariki make up 80 percent of Oranga Tamariki, I deserve that proportion of the budget. This is what a Budget should look like for Māori in a Kāwanatanga space. We are all taxpayers. We’re all ratepayers. Remember that this Government continues to make its funds and its money and its ability to have a Budget on stolen Māori land, assets, and resources. This is what your Budget should look like.

There is no mention of Māori within Vote Health or Vote Education. Hey, let’s look at Matatini—you’re patting yourselves on the back for that. Matatini was given $38 million by Labour. You have given it $48 million over three years, which is less than the annual receiving of Matatini. It’s less; it’s $16 million a year over three years. This is what you are proposing.

If this Budget reflected our population, that’s what your Budget should look like. We want by Māori, for Māori, to Māori kaupapa—not by Pākehā, for Māori; we’ve had enough of that. Here is your problem: you have created the colonial trauma, the colonial violence, and what you do is you then reward yourselves by ensuring that you fund yourself on the trauma that you have created amongst our people. [Interruption] You might want to listen to this. You have created the trauma amongst our people, and then you have the cheek—the absolute cheek—to think you can rehabilitate us. That is a cheek to think you can impose your colonial violence and trauma on to us and then think that you can rehabilitate us, to continue to fund yourselves on the trauma that you’ve created amongst our people. It is an absolute cheek, and today we declare that that stops.

We have started the conversation amongst ourselves. Be patient. We’ve allowed you 150 years to establish yourselves here as a Parliament. Today, we have started the conversation, we started the wānanga to organise ourselves in the rangatiratanga space. We’re not denying Kāwanatanga, because my tūpuna consented to Kāwanatanga, but they also protected the pre-existing rights of tangata whenua.

Today, we have started the revolution in regards to us organising ourselves in our rangatiratanga space. You must be patient. You have had 150 years. You must be patient whilst we wānanga this amongst ourselves to look at what a situationship looks like between Kāwanatanga and rangatiratanga.

Debbie Ngarewa-Packer: Not transactional.

RAWIRI WAITITI: It is not transactional—it is not transactional. We are in a transformative space, and it’s happening to indigenous peoples all over the world. This is what your Budget should reflect. If we make up a million people in this country—20 percent—20 percent of the Budget should come to by Māori, for Māori, to Māori kaupapa.

You cannot rehabilitate us after damaging us, traumatising us, inflicting violence on to us. You cannot. It is time to have a serious conversation about how you support tangata whenua to bring ourselves out from underneath the bonnet of colonial violence. Allow us the time to organise. Be patient so that we can look at what rangatiratanga and Kāwanatanga situationship would look like, because our relationship is with the Crown; it’s not with Parliament—our relationship is with the Crown: mana to mana. Parliament is a mahi space, and it’s a situationship where we should be coming together for certain situations to be able to support each other. The problem is that we have been made to feel like second-class citizens in our own country for far too long. We will not allow that to happen anymore. This is what this Budget should reflect. Be patient.

Ko tāku ki taku Iwi Māori [This is my message to my people]: be courageous. We must step into this space. We must organise ourselves, create rangatiratanga to be able to talk to Kāwanatanga about how we bring ourselves out from underneath the bonnet of colonial violence.

This is what a Budget should like. This is what Aotearoa hou looks like. This is not a you and us. This is about us organising ourselves and then looking at what a situationship looks like between us.

We are organising. We are empowering ourselves. We are rising. Like a good rēwena bread, we are bred different. We are bred different, but we are rising. Koia hoki te mahi i tēnei wā. [And that is also what is happening right now.]

This is where te iwi Māori is going. I heard somebody say, “Oh, why doesn’t the Māori Party just resign if you want to start your own Parliament?” What rangatiratanga looks like to us is our business. If it’s a Māori Parliament we want, that’s our business. Our movement has a strategy. We have a Kāwanatanga strategy—this is it here. We also have a rangatiratanga strategy, which doesn’t sit in this place. This is what the Budget should be reflecting, but it does not—it does not. It continues to support a white economy, privilege.

When my tūpuna came back from the war, they were promised land ballots; they didn’t get it—they went to white farmers, and their mokopuna continue to benefit from that.

You have cut us out of homeownership. To own a home gives huge leverage to a family. If we are 50 percent of the social housing waiting list, we demand 50 percent of the stock. It makes absolute sense. These statistics are yours. This data is yours. The science is yours.

If our people are dying seven to 10 years earlier than non-Māori, why not allow us to access superannuation before that? Follow the science. Follow the data. Until the tide rises where we can all be equitably looked at and equality reigns, I challenge this Government to think outside the square and I challenge you to be patient while te iwi Māori organises itself and upholds our part of Te Tiriti o Waitangi, because we’ve honoured Kāwanatanga, but we’ve allowed you to assume that you have mana over us, and you do not. That is the declaration we made today for our mokopuna. Kia ora tātou.

Hon CHRIS BISHOP (Leader of the House): I move, That this debate be now adjourned.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 55

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15; Te Pāti Māori 6.

Motion agreed to.

Debate interrupted.

Urgency

Urgency

Hon CHRIS BISHOP (Leader of the House): I move, That urgency be accorded the first reading of the Appropriation (2023/24 Supplementary Estimates) Bill, the introduction and passing through all stages of the Taxation (Budget Measures) Bill, the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill, the Waste Minimisation (Waste Disposal Levy) Amendment Bill, and the Land Transport (Clean Vehicle Standard) Amendment Bill; the introduction, first reading, and referral to select committee of the Local Government (Water Services Preliminary Arrangements) Bill and the Resource Management (Extended Duration of Coastal Permits for Marine Farms) Amendment Bill; the introduction and passing through all stages of the Forests (Log Traders and Forestry Advisers Repeal) Amendment Bill and the Accident Compensation (Interest on Instalment Plans) Amendment Bill.

As is tradition on Budget day, the Government is progressing several bills through urgency as part of the Budget process. And I note for the House’s edification that we have made a change from the approach of previous Governments, in which the Opposition would find out about what bills were being introduced at the moment they were introduced, and the Opposition had approximately 10 minutes to figure out how they were voting or indeed what they were going to say about those bills, by providing copies of the bills to the Opposition at 2 o’clock when the Budget was introduced. So they’ve had a reasonable amount of time. I accept it’s not an ideal amount of time, but at least it’s more time than any Opposition in the past has had.

The Taxation (Budget Measures) Bill delivers on our commitment to deliver tax relief to hard-working New Zealanders. The public finance bill and the waste minimisation amendment bill reflect new savings measures in Budget 2024, and the land transport bill that I’ve just mentioned is required to ensure that changes to the Clean Car Standard targets can be made as soon as possible to increase certainty for the vehicle industry. The local government water services bill and the resource management amendment bill are being referred to select committees but are also required to pass with pace. The local government bill is the second step in the Government’s Local Water Done Well policy. And the marine farm bill extends marine farm consents by 20 years under the Resource Management Act. The Forests (Log Traders and Forestry Advisers Repeal) Amendment Bill will reduce a regulatory burden and remove compliance costs that have been put on forest businesses. And the accident compensation bill is a bit of a tidy-up bill. It makes it explicit that ACC can charge debit interest where levies are paid by instalments. As I understand, there is some current ambiguity in the legislation. Both those two bills need to pass by 1 July, so there is urgency to ensure that occurs.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

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 Measures) Bill, introduction

Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill, introduction

Waste Minimisation (Waste Disposal Levy) Amendment Bill, introduction

Land Transport (Clean Vehicle Standard) Amendment Bill, introduction

Local Government (Water Services Preliminary Arrangements) Bill, introduction

Resource Management (Extended Duration of Coastal Permits for Marine Farms) Amendment Bill, introduction

Forests (Log Traders and Forestry Advisers Repeal) Amendment Bill, introduction; and

Accident Compensation (Interest on Instalment Plans) Amendment Bill, introduction.

SPEAKER: The Appropriation (2023/24 Supplementary Estimates) Bill is set down for first reading immediately. The remaining bills in the urgency motion are set down for first reading presently.

Bills

Appropriation (2023/24 Supplementary Estimates) Bill

First Reading

Hon CHRIS BISHOP (Associate Minister of Finance) on behalf of the Minister of Finance: I move, That the Appropriation (2023/24 Supplementary Estimates) Bill be now read a first time.

A party vote was called for on the question, That the Appropriation (2023/24 Supplementary Estimates) Bill be now read a first time.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Bill read a first time.

Bills

Taxation (Budget Measures) Bill

First Reading

Hon NICOLA WILLIS (Minister of Finance): I present a legislative statement on the Taxation (Budget Measures) Bill.

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

Hon NICOLA WILLIS: I move, That the Taxation (Budget Measures) Bill be now read a first time.

Tonight in this House, we are going to reduce taxes paid by working people for the first time in 14 years. This tax relief is long, long overdue. It is owed to New Zealanders who work hard every day and yet have given more and more of that hard-earned wage to the Government, only to watch that Government over these past six years do less with their money than they would have done with it; deliver them poorer results; spray their money everywhere; drive up inflation; drive up interest rates; and leave them, the working people of this country, in a cost of living crisis.

I’m going to take you through how this bill delivers tax relief. But as I embark on this speech, here’s the question I think all the members here should be asking: who in this House, in their right mind, in a cost of living crisis, would oppose tax reduction for working people? The question we have to ask—because there is a party in this House that once called itself a party of the worker—is: will that party oppose working people being able to keep more of their own money? That is the question that I’m very interested to see answered tonight.

Because as members will be aware, today I delivered the coalition Government’s first Budget, and it addresses the urgent issues facing New Zealanders: the high cost of living. We are providing relief for New Zealanders and their families who have been suffering the effects of inflation; those New Zealanders who, when they’ve been standing in the supermarket checkout aisle, have watched the numbers flick on the screen and wondered if there’s enough money in the EFTPOS account this week to meet those groceries; those New Zealanders who, when they go home from work, see that petrol light on and think, “Just one day till payday; just one more day till I can fill it up.”; those New Zealanders who have said to their kids, “Sorry, no swimming lessons this year, kids. We can’t afford it anymore.” Well, this Government has heard the cries of those New Zealanders and we are going to give them what they deserve, which is tax relief.

It is prudent expenditure to give tax relief because actually you have to ask yourself this: is there anything that is a higher priority than helping people keep more of their own money while encouraging them to participate in work to contribute to our economy? Tax relief is an investment in increased productivity. The tax relief package that we are announcing today in this bill is very seriously targeted at families with children, at low and middle income people, because we know that they are the people who have suffered most through Labour’s cost of living crisis.

This bill gives effect to several measures. The first and biggest of the proposed amendments provides tax relief to individuals and families by increasing the personal income tax thresholds for the first time in 14 years. Raising the thresholds means that you get to keep more of the money you earned before you get moved into a higher tax bracket. We’ve had a situation in New Zealand where unlike many countries in the developed world who automatically adjust tax thresholds to compensate for the effects of inflation to allow for nominal wage growth, or unlike other countries in the world who, while not automatically, have stepped in to do it, our country hasn’t done it for 14 years.

So the effect is that even people on average incomes have been pushed into higher and higher tax brackets, forced to give away a higher proportion of every dollar they earn to the tax man. The effect of this has been that for a median income worker, for a typical worker, their wage now puts them in a much higher tax bracket than it once did. Even a minimum wage earner, if they work a few more hours a week, is paying 30c on the dollar in tax. So this bill that we set down tonight is addressing that.

Let’s step through how it works. So the lowest income tax rate, for example, is 10.5 percent. It currently applies to all income earned from a job up to $14,000. In an atmosphere of high inflation, people are being pushed into those higher tax brackets. Yet with reduced spending power, people are worse off and so is our economy. So we are changing that threshold to $15,600. That means from 31 July, someone on that level of income will be able to earn $1,600 more annually before they begin to pay the higher 17.5 percent tax rate. Currently, any personal income earned between $14,000 and $48,000 is taxed at 17.5 percent, and anything earned over that takes you into the next highest bracket of 30 percent. The new threshold for paying the 30 percent rate will be $53,501. That is $5,500 annually, which will be taxed more fairly at the lower rate of 17.5 percent instead of 30 percent.

Is it any wonder that even Michael Cullen’s Tax Working Group said that if you don’t adjust tax brackets for inflation, you destroy the progressivity of the tax system? That, actually—[Interruption]—well, the Tax Working Group acknowledged that if you don’t address fiscal drag, you make your tax system less progressive. This is actually about helping the low and middle income people and workers of this country. Then, as we step through, any income you earn over $70,000—and bear in mind, members, that the average wage is now $73,000; any income you earn over that is currently taxed at the higher rate of 33 percent. Well, we’re changing that threshold to $78,100 so more of your income will be taxed at the lower rate. The bottom line is this: our changes mean that people on low to middle incomes will pay less and they will be keeping more of what they earn.

Now, we have also got measures in this bill which ensure that tax relief is really targeted at those lower and middle income families. We are expanding eligibility for the independent earner tax credit to boost the wages of those earning $70,000 or less. This will boost their take-home pay. We are also increasing the in-work tax credit for working parents. This boost will ensure that those families who are really struggling with the cost of living will get more money in their after-tax pay.

Finally, this will also introduce the FamilyBoost payment. This is something that is particularly close to my heart because any of the people in this House who know people with young children will tell you that that is a really hard financial time in families’ lives. They face high housing costs as their family expands, often their working hours have been reduced as they juggle childcare, and then the childcare costs they face are often extremely high. Well, the FamilyBoost payment will ensure that working families can get up to 25 percent of a rebate of every dollar of childcare fee that they pay. The effect is up to $150 more for those families every fortnight. That is meaningful relief, and I know it will make a difference.

When I look at this tax bill and I think about what it represents, I think about the people who I have spoken to in recent months and who I talked to on the campaign trail; the people who had taken on extra jobs, Ubering at night just so they could pay the rent; the people who told me that they’d had to say no to chocolate biscuits at the supermarket because they couldn’t afford it anymore; the people who work two jobs, three jobs to put food on the table.

They watched while the last Government said that they needed every one of those dollars; they needed every one of those dollars in tax, and then they wasted it on three waters, on TVNZ-RNZ mergers, on more officials in the back office. That was an injustice, because, actually, working people deserve to keep more of their own money; they deserve a Government that will be as disciplined with its spending as they are. We have, in this Government, a Government that is committed to that; who has gone out and found the savings; found the reprioritisations, line by every line, so that we can put money where it counts: in the back pockets and bank accounts of New Zealanders.

I’ll leave you with these numbers: 727,000 households getting at least $75 more a fortnight; 187,000 households getting at least $100 more a fortnight; on average, households getting $60 a fortnight; and, on average, households with children getting $78 a fortnight. This is real relief, and the test for those who claim to represent working people is: would you really, really oppose it? Because if you do, shame on you.

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

Hon Dr DEBORAH RUSSELL (Labour): Let me give you some numbers. Someone who earns $50,000 a year will end up with a tax cut of $15 a week. Someone who earns $60,000 a year, because of the interaction with the independent earner tax credit, will end up with $25 a week. Someone who earns $70,000 a year will end up with $15 a week. Someone who earns $80,000 a year will end up with $20 a week. Those are the numbers behind this type of shift in the tax thresholds, and that’s what they mean.

But there are some interesting effects of what’s going on and some interesting reactions to what’s going on with the tax cuts. For those of us who are still on Twitter, or, as it’s now known, X, there are some pretty instant reactions coming off there. Let me read some of them to you. Someone called Amazonia says, “My 90-year-old mum, facing a massive hike in rates”—

Hon Members: Thanks to you.

Hon Dr DEBORAH RUSSELL: —“gets a $4 per week increase.”

DEPUTY SPEAKER: Please don’t overuse the word “you” and bring the Speaker into the debate. Interjection is fine, but just be careful in your wording.

Hon Dr DEBORAH RUSSELL: Thank you, Madam Speaker. Ali says, “So grateful for my $7 a week tax cut. It was so worth gutting our public sector for it.” Darren says, “$10 billion in inflationary tax cuts no one wants, $12 billion borrowed during an inflation crisis to pay for it.” Mark says, “My tax cut is less than the increase in my kids’ bus fares—cool. My middle feels so less squeezed now.”, and that’s the reality: give with one hand, take with the other, and the taking has been greater and greater and greater from that side of the House.

The interesting thing is the way that these tax cuts have been presented in the Budget statement. The Government has set out a series of examples of what individuals or families might get, and, in an interesting move, it’s all been on a fortnight basis. That’s useful, because you can double the numbers by doing that. But the interesting one that I found fascinating was the one that went through the various adults and family combinations as to what they would earn, because they talked about a working couple—so two adults earning $150,000 each, per annum. Well, those are pretty well-off people in the first place, and they’re going to get one of the biggest tax cuts going. They’ll end up about $2,000 better off.

Andy Foster: It’s two average wages.

Hon Dr DEBORAH RUSSELL: No, if it’s $150,000 each—each, each, each, each—it adds up to $300,000. That’s a massive household income in this country, and they’re going to get one of the biggest tax cuts available. So there are some interesting ways of prioritising going on with these particular tax cuts.

But in this first speech, I want to direct the House’s attention to the revenue strategy set out in the Budget documents, as required by law. There’s a particular paragraph in it—it’s the second paragraph in it—that says, “The Government will operate a stable, predictable revenue system.”—that’s a good thing, of course. Then it says that the current main tax basis—personal income tax, company tax, and a broad-based GST—will continue to raise the bulk of Crown revenue, and that’s what happens at the moment. Then it says that with prudent control of spending, the Government does not see the need to seek major additional sources of revenue.

But in the briefing to the incoming Minister, in the scenarios that Treasury set out when this Government took office, it clearly pointed to a huge fiscal risk in out-years—not next year or the year after or the year after it, but there is a long-term risk where we know that Crown revenue is going to fall significantly under Crown expenditure. This is expenditure on health, on education, on welfare, and on all the things that we’d like to have in this country in order to ensure that all of our citizens are looked after—so that the pensioner who is facing a massive rates increase is looked after, so that the families who need to pay their prescription charges are looked after, so that ordinary people do well—and yet this Government is refusing to take responsibility for the long-term fiscal projections in this country.

CHLÖE SWARBRICK (Co-Leader—Green): E te Māngai, tēnā koe. Tēnā koutou e te Whare. Just to get rid of the surprise for the Government members, the Green Party will be opposing this bill today. The reason for that is that we come together as communities, as individuals, as neighbourhoods, as people in this country to form something together that we call society. The reason that we do that is so that we can achieve things together that no one individual could achieve alone. That looks like things like our hospitals and our schools. It looks like climate action, it looks like public transport, and it looks like mass State housing builds. That is the point of Government: to generate the revenue to pay for things that no one individual could pay for alone.

What we’ve heard from this Government today is their commitment to continue entrenching and deepening inequality in this country. They have pledged their allegiance to an unfair and unproductive tax system, with trickle-down tax cuts at the expense of pretty much everything else. To that effect, we saw in the financial reports from the Minister of Finance today some cherry-picked statements from the International Monetary Fund (IMF) and the OECD in order to justify some of the things that the Government has done. But what they have done in cherry-picking those statements is decide to intentionally neglect the point that both the IMF and the OECD, in line with market economic orthodoxy, have argued: for Aotearoa New Zealand to implement a capital gains tax—

Andy Foster: What else did they say, Chlöe?

CHLÖE SWARBRICK: —in order to have a more productive and fairer tax system, where we do not simply see money funnelled into housing, Andy Foster, and we end up with a generation of more jobs and productivity.

So who are getting these tax cuts? Well, under the tax settings today as in this legislation, an average four-person family would receive approximately $126 from this Government. But under the Green Party’s tax plan, which we went to this election with, they would receive more than double that, at $288. We would also see the implementation of a tax-free threshold for those who are earning less, those with an income of less than $10,000. We would do that by implementing a wealth tax. And I know that that’s just anathema to the dogma that we hear from the Government parties, but let’s just unpack some of the facts that they have at their disposal and that they knowingly are neglecting and ignoring today.

A year ago, we had the Inland Revenue Department—and the Minister of Revenue is currently heckling me. We had a report that told us that the top 311 families in this country pay an effective tax rate of less than half of that of the average New Zealander. But, more so than that, they hold more wealth combined then the bottom 2.5 million New Zealanders. That’s not an accident. It is a consequence of a tax system that sees those at the top continue to accumulate more and more wealth and more and more power, at the expense of everyone else. That is what drives inequality and that is where poverty comes from.

We have also seen this Government knowingly make decisions to cut funding for the likes of Kāinga Ora, for the likes of rangatahi housing, in order to fund these tax cuts. And what does that say? Well, we have in the child poverty statistics, or rather the projections, released alongside this Budget today, that the Government has made no commitment to reducing child poverty in this country. It will plateau.

What all of this exposes is that we are not so much dealing with a cost of living crisis, as this Government campaigned on throughout the election last year; we are dealing with a cost of greed crisis, and we in the Greens are asking New Zealanders to connect the dots. While New Zealanders out there have paid record prices in rents, for their groceries, for their energy, guess who has made record capital gains and profits? It is the supermarket duopoly, it is the energy gentailers, and it is landlords—who this Government handed a $2.9 billion tax cut to, only to increase the cost of housing, as the Reserve Bank of this country says. Our ask, as the Greens, is to see New Zealanders not let this Government pull the wool over their eyes, because the truth is out there and the evidence is clear: this Government is knowingly increasing inequality.

SIMON COURT (ACT): I could offer that member, Chlöe Swarbrick, a woollen blanky to soften the reality that this country can’t afford to keep spending, keep taxing people. We have to have a change, and that’s what this Budget shows. We’ve heard from the Greens member her proposal for a wealth tax—it’s economic illiteracy. You can’t tax your country into prosperity. We’ve heard more slogans but no substance, no solutions. We can only grow our wealth so that we can offer better conditions for New Zealanders, so that New Zealanders can actually keep more of what they earn. We can also do that by shrinking the size of the State and making sure that the Government doesn’t have its hands deeper and deeper in people’s pockets.

We heard no solutions from Labour. They’re going to spend a lot more time in the wilderness before Kiwis look to them for salvation again. Once burned, many, many times shy. This coalition Government understands that spending money is not the measure of success, unlike the previous Government, it’s actually getting results that count.

ACT is proud to be part of a coalition Government that’s already found $7.5 billion in savings in last year’s mini-Budget, and another $1.5 billion in ongoing savings over the past few months as Ministers worked to prepare this Budget. That includes $107 million found from the Healthy School Lunches programme, while actually extending that programme to feed more children in need in early childhood education. We’ve found $486 million just knocking around in the bottom drawer at the Ministry of Business, Innovation and Employment which we can return to the centre to provide for tax relief as one of the benefits for New Zealanders.

Now, it’s true that ACT would have preferred to go further with spending cuts and tax cuts to let Kiwis keep even more of what they earn. But it’s also true that a Government without ACT would not have gone as far. That is why ACT is proud to support this bill and we’re proud to be offering tax relief to New Zealanders in Budget 2024.

TANYA UNKOVICH (NZ First): I rise on behalf of New Zealand First to contribute to the Taxation (Budget Measures) Bill. And I’m proud to say that we support this bill. It’s quite an honour to stand in my very first Budget and provide the very first speech. Now, why are we supporting this bill? Well, it’s been 14 long years, and it’s now time. It is now time to change the—

Hon Mark Patterson: The time has come.

TANYA UNKOVICH: What was that, my friend?

Hon Mark Patterson: The time has come.

TANYA UNKOVICH: The time has come. Now, finally, from 31 July this year, the taxation thresholds will change. And it’s going to be a significant change for many, many New Zealanders—hard-working New Zealanders who have been waiting for this change. I feel very honoured to be able to stand here and say, “Your time has come.” Not long to wait for this change. And the good thing is the money is going to be in their pockets for them to choose how they would like to spend their money. So that is why I am very pleased to commend this bill to the House on behalf of New Zealand First.

TOM RUTHERFORD (National—Bay of Plenty): Thank you very much, Madam Speaker. It gives me great pleasure to stand and rise and speak on behalf of the National Party and our Government in support of the Taxation (Budget Measures) Bill that we are bringing to the House straight after the delivery of the Budget this afternoon. And what a fantastic job did Nicola Willis do as the Minister of Finance. What a superb job of finding a great medium, in the difficult economic times we find ourselves in, of actually delivering tax relief for New Zealanders and bringing this bill to the House straight after the delivery of the Budget.

The Taxation (Budget Measures) Bill is about increasing personal income tax thresholds from 31 July this year, just as was campaigned on in the 2023 election. This bill gives effect to our Budget’s tax measures’—announced earlier—aim to help reduce the cost of living pressures faced by hard-working New Zealanders by providing much-needed tax relief and additional support, in particular to low and middle income individuals and families. It delivers the FamilyBoost tax credit, helping with the cost of early childhood education; expands eligibility to the independent earner tax credit; and increases the in-work tax credit and the minimum family tax credit. I support this bill and I commend it to the House.

Hon Dr MEGAN WOODS (Labour—Wigram): Often you hear Governments stand up in the first piece of legislation, in what will be a long haul of Budget urgency in terms of the debates that are there, fizzing with what their Budget has provided. And we’re hearing this about cost of living pressure relief for families. But it has not taken New Zealanders long to pull this apart, to understand that the poorest New Zealanders are not getting that relief, that the wealthiest New Zealanders are getting two times the relief of minimum wage workers.

So when we have the Minister of Finance standing up in this House and claiming that they are the party of workers, well, I can tell you the party of workers does not take away cheap public transport for kids. It does not take away healthy school lunches. It does not put costs back on prescription charging. And it does not do things that it knowingly knows will raise rents and insurance—the very things the Reserve Bank have been telling New Zealanders is putting a pressure on their back pocket and the money they have.

One of the important documents that accompanied the list of new initiatives—although that’s reasonably thin in this Budget, because there aren’t that many—is a very interesting document called the Budget Economic and Fiscal Update (BEFU). And what the BEFU does is it does give that economic and fiscal update. This is Treasury’s, not the Government’s, forecast for the future.

One of the things that I find concerning—and I think New Zealanders do too as they’re counting their $2 and $4 a week tax cuts; it will send a chill down their spine—is that we know how these tax cuts are being paid for. They’re being paid for by cuts to public spending and funding things like the reintroduction of interest deductibility. And what does the Treasury—the economic adviser to our Government—have to say? Well, it says that “the reintroduction of rental property interest deductibility for tax purposes, and changes to the bright-line rules [are] all expected to have [an] … upward impact [on rents]. Rents are forecast to continue rising rapidly over the early years of projection”. So this is the kind of things that New Zealanders can look forward to because of the choices that this Government has made in this Budget.

This Budget is a Budget of broken promises. Nicola Willis, when delivering her Budget, started her speech talking about what she’d heard on the doorstep. I’m sure she also heard on the doorstep that people were expecting the $250 a fortnight that National went out and told them they were getting. And what are they getting? They’re getting—

Hon Kieran McAnulty: Bugger all.

Hon Dr MEGAN WOODS: I cannot quote my colleague Kieran McAnulty, but “not much” would be the paraphrase of what he said.

But I think of superannuitants. When I have to go out and look them in the eye and talk about my $20 tax cut, and know that for a single superannuitant that is $2.50, how can that be seen as anything that any Government could hold its head up about? It is not even, as Chris Hipkins said, enough to buy a packet of chewing gum. This is not how you address cost of living. These are tax cuts that are at the expense of core public services—the very things that these cuts will put pressure on in New Zealanders’ household budgets and New Zealanders’ wallets. This Budget will cost Kiwis more. This is not a Budget where the tax cuts are going to deliver the relief that they thought was coming their way. They are going to pay more for their health, they are going to find that what is delivered in our schools is being cut. There is not a single cent in this Budget for supporting learning services. How are we going to ensure that those kids who we need to support the most to make sure they have educational attainment are supported?

I will, in many other contributions over the course of the next three or so days, talk about the cuts to climate funding that account to billions and billions of dollars. So this Government not only is letting down New Zealanders today, but it is letting down the next generation of New Zealanders too.

STUART SMITH (National—Kaikōura): Thank you, Madam Speaker. It’s a pleasure to speak on this bill.

This is, as the finance Minister said, a clean-up Budget. It is a clean-up Budget because of the mess that has been left by the previous Government, and it actually heralds a new era. It’s an era in lowering Government spending, giving much-needed tax relief to the squeezed middle in particular, and actually getting on with the business of rebuilding this economy. It’s in huge stress because of the mismanagement by the previous Government—it’s a massive hole; we’ve heard a lot about fiscal cliffs, but they are holes because of that previous Government not spending enough time on actually getting New Zealand back working, and just employing more and more people to do less work. That’s just out of control.

But what does it actually mean? Well, for someone on an average income, they’re going to end up with $102 more a fortnight. That’s a significant amount of tax relief. That’s fantastic for those families, and if they’ve got FamilyBoost, they can have another $150 a fortnight. That’s fantastic. And a single person earning $55,000 will be better off by $51 a fortnight. It is significant tax relief that is long overdue—the first time in 14 years that we’ve got tax relief. It’s way overdue.

And the fees free—I think that’s one of my favourites. Fees free—shifting it from the first year at university to the last.

Hon Mark Patterson: You’re welcome.

STUART SMITH: Yes, it’s a New Zealand First policy and I think it’s fantastic. So, with that, I commend this wonderful bill to the House.

Hon KIERAN McANULTY (Labour): Thank you very much. You might think that if it was so wonderful, the Government members would like to use the entire time available to them—

Hon Member: Especially the chair.

Hon KIERAN McANULTY: —especially the chair of the Finance and Expenditure Committee. I would have thought that he, of all of them, given how rowdy they were today during the Budget speech, here in the very first bill that arises from that Budget, would actually spend the time available to talk about how good it was. I think the reason that they haven’t is because, deep down, they know it’s actually not that great, and, deep down, they know that it actually doesn’t deliver what they promised. This bill doesn’t meet up to the promises that the Government has made. They clearly don’t know the numbers, because Stuart Smith has just yelled out some numbers as part of his two-minute speech that were inaccurate. They weren’t right. They did not match what the finance Minister said. When you’ve got the chair of the Finance and Expenditure Committee, who doesn’t actually know what’s in the bill, standing up and saying the numbers—I think that says a lot.

At the end of the day, this bill takes away from New Zealanders. Because if we just actually dive into the detail, the question has to be asked: what cost is coming with the tax cuts this bill is bringing? For the many, many people in this country that are renting, the $2, the $4, the $6, or whatever they get is going to be swallowed up almost immediately by the increase in rents that the Budget, which these changes are part of, is bringing in. It’s in their own documentation. It says, very clearly, that the $2.9 billion tax cut that this Government is giving landlords by reintroducing interest deductibility, by scrapping the brightline test, and scrapping initiatives like emergency housing and transitional housing and maintenance on Kāinga Ora homes—all of which is in the Budget—and scrapping the First Home Grant—all adds up to one thing: higher rents.

We know that the growing proportion of renters amongst the over-65s, when they look at this Budget and they hear the Government members crow—and many of them have huge proportions amongst their constituents over 65—and they look at this and they see that they’re getting $2.15, if they rent they’re soon going to get a rent increase significantly higher than that. What are the—

Mike Butterick: Whatever.

Hon KIERAN McANULTY: Oh, whatever. Yeah, whatever. Let’s just say “whatever” to facts. Let’s say “whatever” to their own documents. It’s in your own documents. I tell you what: go back to Hamilton and invite the over-65s to come to your electorate office. And when they come to you and they say, “I’ve only got $2 a week out of this, but my rent’s gone up 20 bucks.”, will you say “whatever” then? Will you say “whatever” to their face? I bet you don’t. I bet you don’t have the guts. He’ll say it quietly off to the side, but he won’t look his constituents in the eye and say what he’s going to say here in the hope that no one hears.

But we did hear, because that is the attitude of this Government—they don’t care. When they are presented with the damage that this bill is actually going to do to working people and to retired people, their reaction is “whatever.” They don’t care. They do not give a jot. And this is supposedly a Government made up by a party that was formed to look after old people. New Zealand First is supposed to look after old people, and with the possible exception of Mark Patterson—who is a friend of mine and so I’m not going to pick on him, but I’ll pick on the rest of them—they don’t court the old people’s votes now. It’s almost like unless they’re wearing tinfoil, Winnie don’t care. That’s their constituency now: they’re after the cookers, and they’ve forgotten about the old people. And this Budget sums it up.

It’s not just the old people, though, because, of course, the “average” wage means that there are many people in this country earning underneath that, and they don’t get the figures that the finance spokesperson talked about in this Budget. They get bugger all, and that is not fair. That is not fair, when people like me—in fact, every member of Parliament is walking away with 80 bucks a fortnight that we don’t need. I don’t need 40 bucks a week. I don’t need it. Here we are, arguing that this legislation is supposed to be helping those that need it, and yet those that don’t need it are benefiting the most. That is a choice that this Government made, and it just goes to show what their priorities are. So when New Zealanders look at this bill and they look at what they’re supposedly getting, look at what the Government’s also taking away.

CATHERINE WEDD (National—Tukituki): Madam Speaker, thank you. I’m so eager to talk about Budget 2024, which is a Budget for hard-working New Zealanders, providing tax relief after 14 years, while on that side of the House they kept on dipping into the incomes of hard-working New Zealanders like they were a bottomless ATM. Well, we are here to turn that around and reduce the cost of living and give more back to those hard-working New Zealanders.

Our tax package targets hard-working New Zealanders and families and young people and the middle and lower income earners. It gives average-income households up to $102 a fortnight, plus FamilyBoost childcare payments of up to $150 per fortnight. We all know how tough it is with those childcare costs out there. People are doing it very tough at the moment.

Our tax relief in this Budget puts $3.7 billion a year back into the pockets of New Zealanders. This tax relief package will also be fully funded from all the savings from all the wasteful spending of that side of the House, because we are going to be more fiscally responsible with taxpayers’ money. Therefore, I commend this bill to the House.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Bill read a first time.

DEPUTY SPEAKER: This bill is set down for second reading immediately.

Second Reading

Hon SIMON WATTS (Minister of Revenue) on behalf of the Minister of Finance: I move, That the Taxation (Budget Measures) Bill be now read a second time.

The high cost of living is one of the most pressing issues here in New Zealand today, and that is why we are considering this bill under urgency. Given that urgency, I will provide just a brief recap of the content of this bill and the purpose for the second reading.

It will be obvious that the purpose of this bill is to provide responsible tax relief squarely at lower to middle income Kiwis. This will be done by increasing the bottom three personal income tax thresholds, which will allow people to keep more of what they currently earn before moving to higher income tax levels.

The bill will also extend the independent earner tax credit to compensate for wage growth and help more people with the cost of living. It will also boost the in-work tax credit so that low to middle income working families will get up to an extra $50 per fortnight.

These changes are necessary because many families are struggling with the high costs of housing, food, and also childcare. That’s why this bill will also legislate the previously announced FamilyBoost, which will help 100,000 households with young children to be able to afford early childhood education and make that more easy for them. The cost of early childhood education fees can be a barrier to entering the workforce, particularly for the second income-earner in the household. All families earning up to $180,000 with early childhood education costs will be eligible. However, to ensure support goes to families who need it most, the maximum repayment will gradually reduce for families earning more than $140,000.

These changes are what we promised in response to the inflation impacts created by the last Government. But on the other side of the ledger, inflation has also had another effect. Overseas-based student loan borrowers are currently charged interest at the rate of 3.3 percent on their student loans, but over the last three years, inflation has overtaken student loans’ overseas interest rates by 9.5 percent. The bill therefore increases the interest rate charged on overseas-based borrowers of student loans by 1 percent for a period of five years from 1 April 2025. Increasing the current overseas interest rate formula by 1 percent for a limited time of five years will partially cover the loss of value in the scheme caused by the last three years of high inflation.

One of the final items in the bill is an urgent remedial amendment to ensure that Inland Revenue can process claims for research and development tax incentive if a business applies for approval under an incorrect entity name.

Overall, the bill package will increase the income of most households in New Zealand. However, a small number of households—less than 0.3 percent—will have their income reduced by $2 per fortnight on average. This is due to a quirk in the way in which the tax threshold adjustments interact with the calculation of tax for people who receive a benefit for only a part-year. After the personal income tax changes take effect, these part-year benefit recipients will receive slightly smaller tax refunds at the end of the tax year.

What the bill package will do is increase the income of 94 percent of households in this country by $60 per fortnight on average. Households with children will gain $78 per fortnight on average, and that is a great result for hard-working families and households across this country. This Government has delivered on the promises that we committed to the New Zealand public. We have delivered income tax relief to hard-working New Zealanders, and this bill is the proof in the pudding that we have delivered the actions that we promised to New Zealanders. We should be—and New Zealanders should be—proud of that achievement.

This is the full extent of this Budget bill. It will make a real difference for New Zealanders up and down this country, and I commend this bill to the House.

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

Hon Dr DEBORAH RUSSELL (Labour): Thank you, Madam Speaker. In the lead up to the Budget, the Minister of Finance was at pains to say several times that the Government would have tax cuts and that they would be meaningful—they would be meaningful—that they would make a substantial difference to people. But what this bill does is it shifts the tax thresholds around. The net upshot of it is the most that anyone will get—the most that anyone will get—from the shift in the tax thresholds is $25 a week, and that’s only in conjunction with the independent earner tax credit. Now, that’s the amount that someone earning about $60,000 a year will get, in conjunction with the independent earner tax credit. It’s the very most they will get. Most people—people like those of us in this House—who are earning over $78,000 a year will get a tax cut of about $20 a week.

But, in the meantime, public transport costs have gone up. In the meantime, rates have skyrocketed. In the meantime, the cost of going to the doctor has accelerated. In the meantime, there has been substantial inflation caused by worldwide factors; it’s a worldwide phenomenon.

Tom Rutherford: Oh, here we go. Here we go. Playbook number one: worldwide factors.

Hon Dr DEBORAH RUSSELL: In fact, sitting in the Minister of Finance’s speech, the Minister of Finance said—and it was gobsmacking actually—that the Government can only be held responsible for factors within its control. She started talking about the worldwide factors that are affecting them. Somehow, they didn’t exist a year or so ago! And, in the midst of that, what she has been at pains to talk about over the last few weeks are the “meaningful” changes to the after-tax income that people get. I put it to you that, in face of the increased cost—the increased cost because the Government has withdrawn from services—these shifts in the tax thresholds do not deliver anything like a meaningful increase to after-tax incomes.

Tom Rutherford: Nobody’s on that side of the House; they haven’t turned up for days.

DEPUTY SPEAKER: Excuse me—that’s not an appropriate comment.

Hon Dr DEBORAH RUSSELL: Going from that broader issue to one more detailed issue, in this bill there is something that was—more or less; until the very previous speech—a secret new tax on student loans, on student loan borrowers. Now, ordinarily, when there’s a measure taken in the Budget, it will be highlighted, it will be discussed, it’ll be in the publicity documents. But the only way we found out about it was by reading the tax bill itself—and here it is. So the interest rate that is going to be charged to people who go overseas on their student loans is going to increase—

Hon Member: By 1 percent.

Hon Dr DEBORAH RUSSELL: —by 1 percent. So, again, sitting in the detailed estimates—I’m going to direct the House’s attention to the section on revenue—there is an increased amount of funding for investment in compliance activities. Let me just read what it says. It says this initiative provides funding for and shows an increase in tax revenue from Inland Revenue’s increased compliance activities on tax and student loan overseas-based borrowers.

Now, having sat in that role myself for some time and having had student loan borrowings within my remit, there are some extraordinary outstanding debts on student loans, and some students—people who studied here in New Zealand then have gone overseas—who are in real financial trouble, who took out loans when they were young and didn’t really understand the impact of it. Now, this Government is going to chase after them even harder and is going to charge them more while they are about it. Sitting in this tax bill is that increased charge on student loan borrowers.

You know, getting an education is sufficiently expensive as it is. It’s hard enough, and that Government is making it harder. That sits along with some of the other stuff they’re doing in tertiary education, making it harder for people to get an education. They should be ashamed of what they are doing in that space.

There are a whole lot of other changes sitting in this Taxation (Budget Measures) Bill. A lot of them are simply consequent on the changes in the tax thresholds. They are deeply detailed; they are flow-through changes to fringe benefit tax, to employer superannuation contribution tax, and so on—all the sorts of changes we would ordinarily expect. But the heart of this tax bill—the heart of it—is that shift in income tax thresholds. As I’ve said before in the first reading speech on this bill, it does provide a change, not as the Minister said—and I’m going to take it that he just made a slip of the tongue. It doesn’t change people’s income; it will change the amount of income they take home after tax. Of course, any increase in after-tax income is welcome.

Of course, another way to increase the income that New Zealanders have is to provide a flourishing economy. This is a Government that in order to provide its billions of dollars of tax cuts—its tax cuts which favour the already wealthy—has cut services and cut jobs dramatically. There is a high cost to this shift in income tax thresholds. The high cost is being borne by people who have lost their jobs.

You know, we’ve had some organisations in this country celebrating that 5,000 people are out of work, in order to provide these tax cuts. So, in this country, we need to have a little bit of a think about why we pay tax in the first place, why paying tax is something that supports us, that supports our health system, that supports our welfare system, that supports our education system, that builds our roads, that provides for our police, that provides for our defence, that provides for our judicial system, that provides for all the things that we like to have in this economy and in this country because it makes living here good.

This is a great place to live, and it is a great place to live precisely because of the things that the Labour Party, and people on this side of the House, have fought for and funded, for generation upon generation. We are the party of health. We are the party of education. We are the party of welfare. We are the party of the environment. We are the party that supports the way of life we like in this country. In order to do that, we all pay our taxes. We all make a contribution to the common good.

Through this tax bill, coupled with all the swingeing cuts to services that this Government has made, all we are doing is shifting costs from one pocket to another. All we are doing is ensuring that families who now have, perhaps, some more money in their pocket—because of the changes in the tax thresholds—have to, at the same time, pay increased public transport fares to get their children to school. All we have is families who might have some extra money in their back pocket—because of these changes in tax thresholds—having to pay more in excise tax, starting from the 2026 year. All we have is families who might have some more in their back pocket—because of this shift in the income tax thresholds—having to pay incredibly increased rates, because that Government would not fund the critical water infrastructure needed in this country. All we have from this shift in income tax thresholds, which might put a bit more money in people’s back pockets, is families who now have to pay more to register their car.

So there’s a whole lot of sneaky increased costs which are now no longer being funded. On top of that, they’ve imported into this an increased tax on our student-loan borrowers—on the very people who’ve done their damnedest to get ahead. It is a disgrace. It’s an absolute disgrace. And this Budget is a disgrace. They should be ashamed to be part of it. It’s a Budget with no vision, with no care, with no forethought for the future, with no way of ensuring that, long term, this country can thrive, that people in this country can do well. They should be ashamed to be part of it.

DEPUTY SPEAKER: Members, the time has come for me to leave the Chair for the dinner break. The House will resume at 7.30.

Sitting suspended from 6 p.m. to 7.30 p.m.

ASSISTANT SPEAKER (Greg O’Connor): Good evening. The House is resumed. We are on the second reading of the Taxation (Budget Measures) Bill.

Hon JULIE ANNE GENTER (Green—Rongotai): Tēnā koe e te Pīka. Tēnā koutou e te Whare. This bill, the Taxation (Budget Measures) Bill, which represents the tax changes that the Government is bringing in, ultimately shows, I think, the ideological difference between the Government and the majority of New Zealanders, because the majority of New Zealanders know that we can do so much more working together. These tax changes are very “I, me, mine”. That’s how I would sum up the ideology of the governing parties: “I, me, mine”. It’s the little gains that they’re giving to individuals and missing out on the bigger picture of what we can do together.

They claim they’re delivering when, at best, they’re delivering $10 or $20 a week extra to people, but they’re taking it back. It’s a drop in the bucket from what they’re taking away that we can achieve together. I’ve already seen people publicly commenting on this. They’re getting an extra $20 a week—that’s what you get if you’re on the higher end of the income spectrum—but they’re going to miss out because their daughter’s bus fare has gone up to over $13 a week and they have prescriptions that they now have to pay more for. It doesn’t take into account the loss of the collective investment that we could be making in the infrastructure and services that serve us better when we work together.

Cheaper public transport, free prescriptions, making it easier for people to buy electric vehicles—because we have to, because that’s how we adapt to the climate crisis: by decarbonising our transport system. But they’ve axed the Clean Car Discount. They’ve massively put up the price for driving electric vehicles (EVs) through road-user charges, and, of course, we haven’t even begun to see the true cost of the cuts that will be felt in public services that are no longer there for people.

This is a smoke-and-mirrors Budget. They very much claim to be delivering, but the big win for people, again, is all broken down into a very individualistic approach. I think that most New Zealanders know that when you go overseas, you see better infrastructure and fewer homeless people. That’s because those countries have fairer tax systems and our tax system is still very unfair, and the changes in this bill make it less fair.

The irony is that the Government will talk about trying to deliver for “hard-working New Zealanders”. It’s very much a kind of virtue signal to say that if you are working in paid work, you’re worth more to society than people who are caring for children or caring for elderly or disabled whānau. What if the work that people contribute to society doesn’t have a commercial return? It still has a value to society, and that is something that people on the Government benches really have not yet understood.

We are continuing to let land bankers and land hoarders pocket more and more untaxed income while working people are struggling with rising rents, rising electricity prices, and rising costs of public transport, all because of decisions this Government has made. And there are certain slogans that get trotted out again and again, and you can go right back to that in the 1980s and 1990s to hear where they first started—“Oh, so and so wrecked the economy”, blah, blah, blah, “Got the country into debt.” Again, it’s all just meaningless slogans, like the quotes from Winston Churchill.

If we really want to understand how to build a more productive economy, one that genuinely benefits everyone, we have 30 years of evidence that the neoliberal ideology does not deliver that. It does not work. That’s the facts. You know, I grew up in the United States, where the infrastructure is crumbling. We’ve had these same ridiculous political lines trotted out by right-wing parties since Ronald Reagan, and what has it delivered? Populist demagogues like Donald Trump and crumbling infrastructure, but a small number of millionaires and billionaires who can claim massive tax deductions for their private jets. It’s just crazy. Like, that’s where it goes. That’s where this ideology leads to. It leads to an incredibly unequal society where people increasingly, if they are lucky enough to be the winners in this society—because they inherited property usually, or because they happened to start out with money—end up living in gated communities and having to pay private armed guards because the crime gets worse because you’ve got people who are starving outside the walls of that gated community.

Now, that sounds extreme, but that’s the road that we are on right now. This bill adjusts personal tax income thresholds, and, as I’ve already said—

Hon Members: Woo hoo!

Hon JULIE ANNE GENTER: They’re very excited about that. The Government members are super-excited about that because that’s the highest goal they have for our society—it’s for people to get an extra $10 or $20 a week and then miss out on investment in our society, our collective wellbeing, and our collective good. But the difference is that most New Zealanders, I think, actually know this, and this is starting to be reflected in the polls. They realise that they’ve been sold a bit of a sham. And that is why I would say this is very much smoke and mirrors—because where are the cancer drugs? Where are the cancer drugs that were promised? Where are the EV chargers that were promised? Where’s all the infrastructure that was promised? It’s not going to happen and it’s definitely not going to deliver the outcomes.

Finally, in my last few minutes, I just want to talk about how this bill in particular is so harmful right now, because we are facing a climate crisis that is going to continue to affect the world and New Zealand. And the Government parties not only do not have answers; they are literally taking us backwards. The things that they propose as solutions to the climate crisis are the exact opposite. So the changes that they’ve made to the clean car legislation are going to mean higher-emissions vehicles, higher emissions from road transport. The changes that they’re making to the Resource Management Act, to have a fast track—they claim this is about renewable electricity. In reality, they will be allowing more coalmining and motorways that make emissions worse, so it doesn’t stack up.

Ultimately, I think that most New Zealanders have the values—and probably the members opposite; some of them do have the values and they do understand manaakitanga, generosity, working together, being collaborative. How is that not the most fundamental value of a liberal democratic society? And the way that we implement that is through our shared resources, through having a fair tax system that ensures that everyone in New Zealand has what they need to live a good life—not an extra $10 or $20 a week, but spending more on public services, spending more because public transport fares have gone up, because we’re charging more for our prescriptions.

The thing that I really can’t understand about this Government, but I think they have realised, and it will increasingly become clear to the country, is that it is not possible to improve our infrastructure, improve our public services, and deliver large tax cuts to landlords. Until we fix our tax system, we aren’t actually rewarding people for working hard; we’re rewarding people for owning property. And that is one of the biggest challenges for us to improve the productivity of our economy—the fact that there’s an incentive to invest, not to build new houses. The interest deductibility was there for new builds, but now that the Government has given it to existing houses, there’s an incentive to buy more of the houses that already exist, which, of course, has not reduced rents.

Surprise, surprise. No, the changes that benefit the landlords in this society do not put downward pressure on rents—rents continue to go up—but I tell you what would and what the Green Party would definitely support: rent controls. If the members opposite care about keeping rents in check, then build more public housing and put rent controls on rents. Otherwise, it’s just lip-service, and we know who the Government really represents. They represent the landowners. They are feudalist.

Hon ANDREW HOGGARD (Minister for Biosecurity): Thank you, Mr Speaker. Jeez, where to go! I mean, if you needed a lesson in how to kill off any building of rentals, that speech was it. That’s how you kill the rental market—put rent controls in. Honestly!

Look, this bill is pretty simple, really. It’s a movement of the tax brackets. It’s about time—2011 was the last time these tax brackets were shifted. In that time, we’ve had a 34 percent increase in inflation. That’s a 25 percent decrease in people’s purchasing power. For every dollar you had then, you’ve got 25 percent less—you’ve only got 75 percent. This needed to happen a long time ago, this needs to happen now, and, quite frankly, it needs to happen again.

This is really, really simple stuff. It’s not the Government’s money; it’s the people’s money. It’s leaving it in their pockets—it’s pretty simple stuff. I’ve heard a lot about “Oh, we need to be investing in this and investing in that.” Well, this Budget is investing in a lot of the core things. What it’s not investing in is a whole bunch of failed projects, dreamy ideas, and white elephants all over the show—$100 billion was wasted. What can we see for it? Absolutely nothing.

I see across my portfolios things that I could invest in that would deliver results, but there’s no money. It’s all gone—it’s all been wasted. So, like with any business, we’ve got to cut our cloth to suit. Right now, up and down this country, farmers and other small businesses are doing it tough. They’re doing it really tough, and they’re having to cut their cloth to suit. So that’s what this Government has to do.

I’ve heard a bit about inflation happening everywhere and that it’s not the last six years’ fault. I’ll leave you with a quote which will make the Green Party really happy, because they’ll love the person that made this quote. “Inflation is always and everywhere a monetary phenomenon. It’s caused by too much money chasing after too few goods.”, and in the last six years, we’ve had $100 billion put out there—that’s where your inflation comes from. Thank you, Mr Speaker. I commend this bill to the House.

TANYA UNKOVICH (NZ First): Thank you, Mr Speaker. I’ll take a short call once again on behalf of New Zealand First to support the Taxation (Budget Measures) Bill in the second reading. Now, we support this bill, not only because of what it will do for hard-working New Zealanders but also because it’s another example of this Government delivering, and that is one thing we do. We don’t only talk but we also do what we said we were going to do, and we will continue to deliver for everyone in New Zealand so that they can have greater certainty in what is coming and have faith in us that we will deliver. I commend this bill to the House.

ARENA WILLIAMS (Labour—Manurewa): This is an austerity Budget for Māori. This is a Budget that is dashing the hopes of rangatahi Māori, and taking away the dreams of people who want to live here, who want to own a home here, who don’t want to see their dreams of homeownership taken away, their ability to get into work, and their ability to raise a family. But that is all the things that this taxation bill and the Budget bill before it do.

It’s so disappointing for young New Zealanders who have a dream of homeownership, to have that ownership dream ripped away from them, when we see things like the first-home buyers grant taken away to fund a $2.9 billion tax cut enabled in this bill to go ahead. This Budget enables some of the most extensive transfer of wealth from ordinary working New Zealanders to people who already own homes, at the expense of people who National Governments in the past have championed—that’s people who want to get into homes. Do you know who that will affect the most? That will affect the people who have the hardest time getting into secure, warm, dry homes. Māori, Pacific, people on low incomes, people in the South Auckland communities that I represent will be hurt by these economic decisions that that Government is taking, and represented in this taxation bill.

We heard today from Treasury that unemployment is projected to rise to 5.2 percent. Last time that Government were in charge, Māori unemployment went up to 14.5 percent. Tens of thousands of people will lose their jobs in the next quarter. What is that Government’s response? It’s to cut jobs. It’s to put nothing in the Budget to support Māori aspirations into work. There is nothing in this Budget to support Māori to upskill.

There are cuts to things like the Apprenticeship Boost programme that those MPs campaigned on keeping. It’s been halved. You know, just today, I spoke to a young builder, he was an apprentice called Jimmy Edwards. He told me that he wanted to finish his building apprenticeship and he was looking forward to being able to do that through WelTec here in Wellington. It’s that kind of person who this Government is punishing at the expense of landlords to fund a campaign promise that they relied upon to get elected. But $2.9 billion in the context of their finance Minister standing up today, and saying, “Oh, things are hard. Things are really hard out there for working New Zealanders.” Well, it is a choice to give $2.9 billion worth of tax relief—tax cuts to landlords, when, in fact, people are struggling out there, like Jimmy, who just wants to finish his apprenticeship and get into the construction sector; a construction sector that is struggling and needs not only more workers but a pipeline of builds.

But, no, this Government has actually cut 500 Kāinga Ora homes, and another few hundred are on the block. What does that say to the construction sector? It says, “We were all big talk on the campaign trail, but we’re not going to put in those initiatives that would actually help us deliver on our promises.”

An austerity Budget for Māori hurts all New Zealanders. It means Māori homeownership rates will go down. It means Māori unemployment will go up. It means Māori who want to get ahead, who want to provide for their whānau, who want to do well in life are being denied the ability to do that by this Government’s choices and the kind of economy that they are creating with this type of policy.

Contrast that with Labour, where successive quarter after quarter unemployment was below 4 percent, where tens of thousands of people in South Auckland kept their jobs and kept their connections with their employers. It saw Māori unemployment come down to record lows. It’s that kind of investment which makes a change in this country. It’s that kind of investment which leads to the social cohesion that we all talk about wanting in this House. It’s that kind of investment which means that whānau Māori can succeed. If that is what we want, then these choices are not the ones we should be taking.

Tax cuts worth $2.9 billion fly in the face of everything this House should be doing for not only whānau Māori but for Pacific people, for hard-working South Aucklanders, who were told at the election that they would be getting a cut of $250, but they’re not getting that today. Instead they’re getting more costs imposed on their budgets, they’re getting less relief than they were promised, and they’re getting cuts to the public services they rely upon. This austerity Budget for Māori is bad choices all round.

RICARDO MENÉNDEZ MARCH (Green): It’s time to address the bill, the trickle-down bill, the inequality increasing bill. I want to take us back to a few months ago when the Government decided to cut benefit increases, which, as officials were speaking about, would have increased the level of child poverty rates, and at the time were told, “Oh, like, we can’t take that in isolation.”, despite the fact that reducing benefit increases would increase poverty. We were told, “Wait. Wait, there’ll be other relief for people, so don’t worry.”

And now we’ve seen the so-called relief after an end to the subsidies for medical prescriptions, the end of public transport subsidies, after we’ve seen rents continue to go up and landlords being given more powers to evict tenants and make life harder for people, after we’ve seen the reduction of emergency housing assistance in this Budget. We’ve now been told that people should be comfortable with breadcrumbs in this bill. And the reality is, if you’re a disabled person on the benefit, if you’re someone who’s struggling to make ends meet or without a home, this bill will do very little to lift you out of poverty or to provide any form of relief, because what this bill contains, beyond the breadcrumbs and tax relief, are changes to the in-work tax credit rate, a discriminatory policy that ignores that caregiving is work.

The in-work tax credit has been labelled as an incentive for people to go into work, but it doesn’t adequately support those in part-time work, nor does it acknowledge the caregiving work that people do in our communities. And, at a time when disabled and carers have told us about the importance of caregiving, the Government has once again chosen to ignore the work that caregivers do to support our communities and leave those struggling the most stranded in this austerity, inequality-increasing piece of legislation, as part of a broader Budget.

Let’s speak to another component of the bill. For the so-called complaints this Government had around the brain drain and the loss of talent and people who were overseas, this bill is, effectively, creating a disincentive for people to come back to Aotearoa, because, already, too many people living overseas with a student loan are feeling like they’re just simply not going to be in a position to come back because of the interest rates that they’re accruing. If we want to attract people back to Aotearoa, the solution to that is to actually create communities here that are attractive for people to come back. Like, it’s understandable for why some people would want to stay overseas when they’re seeing rents go up at record levels, when they’re seeing living standards drop, when they’re seeing a Government scapegoat those struggling to make ends meet the most, when they’re scapegoating Māori. Why would people want to come back seeing a bill that will pay for tax cuts by then also increasing the interest rates that student loans will be paid back to?

So this bill, effectively, all it does is throw some breadcrumbs to people, and, in the context of the broader Budget, it doesn’t make up for the fact that this Government has chosen to make life harder for most people by actually legislating against supporting people with health conditions, people who need to use public transport, and renters. This bill, in and of itself, will ultimately benefit those high-income earners more, rather than people who should have been lifted as part of a cost of living Budget. The truth is that this bill, in of itself, will also continue having early childhood education be run as a for-profit private sector and not be treated as a public good. Because the reality with the FamilyBoost tax credit is that all it does is it creates a continuous incentive for early childhood centres to continue putting prices up. And while some people may see that 25 percent relief, the reality is that it does very little to actually tackle the hard political conversation that is why early childhood education is continuously treated as a business and not a public good.

But, I mean, I’m not surprised, right? This is the party that has continuously supported privatisation, the party that doesn’t support everyone living a good life and under a safe, warm, dry home. And so it is absolutely no surprise that they’re putting forward a bill on Budget day to continue with early childhood education being treated as a for-profit business by many, many entities.

The reality is Budgets, and the legislation that are put forward in Budgets, are political choices. The Greens are clear that we will make the choice, should we be in power, to ensure that we end poverty, that we end discriminated caregivers who receive a benefit, and that we tackle the environmental and biodiversity crisis that we face.

STUART SMITH (National—Kaikōura): Thank you, Mr Speaker. The economic mire that we’re in was six years in the making, and this Budget is the first step to rebuild our economy and get New Zealand back on track. And with that, I commend this bill to the House.

Hon Dr MEGAN WOODS (Labour—Wigram): Sometimes when you’re in urgency you’d expect the chair of the Finance and Expenditure Committee to give a more substantial contribution than what we just saw from that member. Budget urgency and the tax packages that often go through them, they do go through under urgency, but I think it is the Government’s responsibility to at least take that process seriously. And for the chair of our select committee, that is in charge of shepherding legislation in this area through, to give a contribution like that, I think exemplifies the disdain to which this Government holds New Zealanders.

Now, we heard the Minister of Finance today in her address talk about doors she had knocked on in the election. And, Mr Speaker, no one knows more than you how effective she was at that task. But what she would have also heard when she knocked on those doors is that National candidates were out there telling the voters of New Zealand they could expect $250 a fortnight in tax cuts. And many of them voted accordingly. Many of them voted expecting that they would be receiving that $250 a fortnight in tax cuts. And what has been delivered to them today? Well, it certainly is not $250 a fortnight. In fact, the Minister of Finance said something different in the House than she would have said on the doorsteps during that election campaign when she told us that for average New Zealand families, that would be $60 a week. There’s $190 missing there in terms of what people were counting on and what people were expecting.

And how are they being paid for when we come to consider the taxation bill that we’ve got before us? And there’s some detailed questions that we will get into at the committee of the whole House stage. But these are being funded by borrowing, and make no mistake about that. The debt track that we are on sees us borrowing $12 billion to deliver $10 billion worth of tax cuts. This is a Government that is pushing the debt as a percentage of GDP higher than it already is, and it’s not to fund services for New Zealanders; it’s to fund tax cuts. And that is what is putting our futures at risk. It is what is taking this country back.

So not only are they not delivering on their promise but the choices being made within this Budget are going to make families worse off. Let’s have a look at some of those things. I think housing is one of those areas. Let’s leave it for another part of the debate, where we’ll get stuck into it—the lack of money for public housing that is in this Budget. But let’s have a look what it does for homeownership. We’d already had the rushed and forced announcement that this Government was killing the Kiwi Dream for a generation of first-home buyers by taking away the First Home grant. But within this Budget, we also see any money that our Government did not spend on progressive homeownership has also been taken away. That money has been put on to the alter of tax cuts. That is one of the prices that New Zealanders are paying.

And what does the Government’s economic adviser Treasury have to tell the Government about what the package that is being delivered in this Budget in the BEFU—the Budget Economic and Fiscal Update—what does it tell will happen to rents? Well, the economic adviser to the Government tells us very clearly it is advising the Government there is going to be upward pressure on rents. That is the result of this package of measures. On page 19 of this document, the Budget Economic and Fiscal Update—to direct those members to something other than the Minister of Finance’s speaking points—you can see that rents are forecast to continue rising rapidly over the early years of this projection. It also says, “the reintroduction of rental property interest deductibility for tax purposes, and changes to the bright-line rules [are] expected to have [an upward] impact.”

So very clearly we can see first-home buyers are being shut out by this Government. And the choices that this Government is making will put upward pressure on rents. That is not the Labour Party saying that; that is the Treasury—the economic advisers that were advising the people that put together this Budget. So when they go back out on the doorsteps, they can ask them how in some cases their $4 and $5 a week tax cut is trending with their rising rents and the fact that they’re shut out of the housing market.

What, then, is this Budget going to deliver for those on superannuation? I am surprised, like my colleague, that New Zealand First let this one through—the fact that we are seeing that for most pensioners we are talking about a $4.30 per fortnight increase, and that is for a couple. That is $2.15 for an individual. That is the benefit that they will see, when other people are getting $40 and up to $60 a week increase. We know that our superannuitants struggle, and ours was a Government that increased superannuation. To see what this Government is doing, how miserly and mean-spirited they are being to superannuitants, is something I am genuinely surprised that a coalition partner took through.

And one of the things I will be interested in when we get to the committee stage is that the regulatory impact analysis goes through a number of the scenarios that ACT put on the table and a number of the options that ACT wanted modelled. And to be perfectly honest, I’ve never seen a regulatory impact statement which is quite so partisan in terms of which party put up what. And what ACT argued for—it lays bare some of the coalition politics, which I think in itself is entirely interesting. But what I do not see in that document is what New Zealand First put up, which I find incredibly interesting, given the impact that this is going to have on what once would have been considered a core constituency.

Another price that New Zealanders will pay for these tax cuts is that we can see that the capital expenditure profile is far lower than that that was sketched out in the Pre-election Economic and Fiscal Update, or PREFU. What we see is that there will be less invested in the capital track than was being projected before the election. This is something that the Government will have some serious questions to answer about because we know we have an infrastructure deficit. And what we have is a Government that is not funding that infrastructure spending to the level that it was going to be before the election. And we certainly will have some questions on this side of the House.

Because when you have a Government that says they can’t afford things like a homelessness action plan or transitional housing for rangitahi but they can give a $2.9 billion tax cut to landlords, we have a Government that is laying clear where its values sit. The kinds of choices that are being made show the disdain for which this Government holds New Zealanders. New Zealanders are realising that. They are realising that there is a string of broken promises. The things that they were told on the doorstep by their National candidates before the election are not being delivered. Top of that list will be the $250 a fortnight tax cut that people believed they were getting. There is going to be some explaining to do: why it is that family that might be receiving $20-odd a fortnight is now going to have to pay for prescriptions, why they’re going to have to pay to put their kids on the bus to school. They’re the kinds of choices that this Government has made. They have taken far more out of ordinary New Zealander’s’ pockets than they are putting back in with these tax cuts.

But the tragedy is that the cumulative effects of those tax cuts will cost us intergenerationally. It is a Government that has slashed the funding for climate initiatives. It is hard to believe that a Government who is in power in the 21st century could make the kinds of choices that are in this Budget around climate initiatives. And the fact that we have a revenue Minister who is also the climate Minister shows choices.

ASSISTANT SPEAKER (Greg O’Connor): The member’s time has expired.

CATHERINE WEDD (National—Tukituki): I rise in support of this bill. I’m very eager to talk about our Budget, which is delivering on our campaign promises to ensure that there is tax relief for hard-working New Zealanders—that’s right. The member on the other side of the House has spoken about our door-knocking during the campaign, and all of those tradies, all of those truck drivers, all of those nurses, all of those teachers, all of those police officers that I spoke to out on the streets in Hawke’s Bay during the campaign who were sick of the wasteful spending by that side of the House, who were sick of the $100 billion and absolutely nothing to show for it. They want tax relief that goes back into their pocket. They know how to spend it better than the Government on that side of the House. They want the money in their back pocket, not in the bureaucracy and the ideology and everything else. They haven’t had tax relief for 14 years, and that is why this Government is going to deliver it. I commend this bill to the House.

ASSISTANT SPEAKER (Greg O’Connor): The battle of the shouting is about equal. Can I just see if we can bring it down equally, too, just so everyone can hear. The Hon Willow-Jean Prime—five-minute split call.

Hon WILLOW-JEAN PRIME (Labour): Tēnā koe e te Māngai o te Whare. Tēnā koe mō te hōmai i te rima miniti ki ahau ki te whakawaha ake i aku whakaaro e pā ana ki tēnei Tahua Pūtea me te iti o te moni ka hoatu ki ngā whānau. Ko te kaupapa i tēnei wā o tēnei o ngā pire, ae, ko tēnei Kāwanatanga, tēnei ringa ka hoatu tētahi wāhi pūtea ki ngā whānau. Ēngari tēnei ringaringa ka tango anō. Koirā te mea e kite ana ahau i roto i tēnei Tahua Pūtea. Ae, ka hoatu ētahi pūtea tēnei ringaringa, ka tango tēnei ringaringa. He aha ngā mea e kite ana ahau? Ko te tango i te pūtea mō te rongoā. Ka whakakorea tēnā. He mea nui tērā mō te oranga o ngā tāngata. He mea nui tēnā i roto i taku rohe o Te Tai Tokerau, ēngari nā tēnei Tahua Pūtea, nā tēnei kaupapa o ngā tax me kī kua hoatu tēnei taha, tango i tēnei ringa. Tētahi anō kaupapa ko te tango i te pūtea hei tautoko i ngā whānau e hoko ana i tētahi whare. Tō rātou whare tuatahi. Kua whakakorengia tērā, kua poronga tērā. Nā, e hoatu ana wētahi moni tēnei ringa, engari tango i tēnei. Te kai i roto i ngā kura, he hanawiti, he pihikete pea noa iho. Ā, ehara i te kai ora, rite ki a mātou. Kua tīni tērā ināianei.

I roto i taku kaupapa o ngā tamariki, hiahia ana rātou ki te hoatu i tēnei pūtea mā ngā take ki ngā whānau, engari ka tango mai e hia miriona tāra i ngā tamariki me ngā ratonga mō ngā tamariki i te Oranga Tamariki. Kahore ahau e whakae ana ki tērā. E kite ana ahau i ētahi pikitia ki waho nei, i tēnei ahiahi. Me te kōrero kei runga, kahore ahau e hiahia ana tēnei Pūtea mai i te Kāwanatanga. Ko tāku e hiahia ana kia tiaki i ngā mokopuna. Hoatu ki ngā hohipera, ki ngā kura, ki ngā pirihimana, rātou katoa. E kite ana ahau i ērā āhuatanga i roto i te Tahua Pūtea. Engari kahore te pūtea e nui rawa mō ērā ratonga katoa. Ko tētahi anō kaupapa, ko te tango i te tautoko mō ngāi tātou te iwi Māori. Ngā ratonga Māori ngā kaupapa Māori. E rapu ana ahau i roto i tēnei o ngā pukapuka kei hea te pūtea hei tautoko i tērā? E mōhio ana ahau kua hoatu ki ngā tāngata whai rawa, whai whare maha: te rua ira iwa piriona tāra ki tērā. Engari ko ngā ratonga Māori, korekau he pūtea kei roto i tēnei Tahua Pūtea mō tērā. Ko ēnei ngā whakataunga o tēnei Kāwanatanga. Tā rātou e hiahia ana ki te tautoko, engari he aha ngā mea kua poro. He nui ngā mea kei roto i tēnā Tahua Pūtea kua poroa.

E hiahia ana ahau ki te whakawaha ake ētahi atu o ngā whiriwhiringa whakataunga o tēnei Kāwanatanga. Ae ka hoatu ētahi wāhi moni mai i tēnei take, horekau he whiwhi i te take mai i ngā whānau engari he aha ngā mea ka ngaro wērā whānau? Kua kī ahau, ētahi o ngā mea, engari kāore e kore, ngā rā kei mua i a tātou ka āta ako mātou ka mārama mātou te hōhonutanga o ēnei poronga. Nā te mea, aini ka rongo mai i ngā ratonga i roto i ngā hapori, ko wai rātou kahore i whiwhi moni ki te mahi wā rātou mahi hei pāinga hei oranga mō ō mātou hapori puta noa i Aotearoa. Nō reira ka hoki anō ahau ki ēnei pukapuka me te āta pānui, āta wetewete i ēnei kōrero kia kite i te hōhonutanga o te tango i tēnei ringa ki te hoatu i tēnei ringa. Nō reira kahore ahau e tautoko ana i tēnei nā te mea he hē ngā whakaaro o tēnei Kāwanatanga.

[Thank you, dear Speaker. Thank you for giving five minutes to me to say what I think about this Budget and the little money that is given to families. The matter at hand for this bill is, yes, this Government. This hand allocates a sum of money to the families. But this hand removes it. That is what I see within this Budget. Yes, this hand allocates some money, and this hand takes it. What else do I see? Taking away money for medicine—that has been removed. That is an integral part of the people’s wellbeing. That is indeed a big deal in my region of the Northland area, but this Budget, and this tax system, I shall say, gives to this side and takes from this hand. Another matter is removing funding to support families to buy a home—their first home. That has also been removed. Therefore, there is money been given to this hand, and taken away from this. The lunches in schools, a sandwich, a biscuit only maybe. It is not the most nutritious. That has now changed.

Within the subject of our kids, they want to allocate this money via taxes to the families, but then take away however many millions of dollars from the children and the child services such as Oranga Tamariki. I don’t agree with that. I see a few pictures here, this afternoon. And what has been said? I don’t want this Budget from this Government. What I want is to care for our grandchildren. Give it to the hospitals, to the schools, to the policeman, all of them. That is what I see for this Budget. But there is not enough funding for all of those services. Other matters include taking money away that support our Māori people, Māori services, Māori initiatives. I am looking within this book for the part that supports that. I know, it has been given to the rich, the home investors: $2.9 billion given. But the Māori services, nothing; there is money here for that. These are the decisions by the Government. What they want to support—but hasn’t been agreed to. There is a lot in that Budget that has been removed.

I want to speak to other matters made by this Government. Yes, there is money given from this tax, nothing given for families, but what do those families lose out on? I have said some of these; however, no doubt the future will show us the true consequences of these actions, because soon we will hear from the services, within the communities, who didn’t receive money to do what they need to do to benefit the wellbeing of all communities in Aotearoa. And so I will return to this book and carefully read through, scrutinise what has been written to see the true consequences of taking from one hand to give to the other hand. Therefore, I do not support this because this Government is wrong.]

RYAN HAMILTON (National—Hamilton East): Thank you, Mr Speaker. It gives me great pleasure to talk about the actual bill that we’re here to talk about tonight: the Taxation (Budget Measures) Bill. The previous speakers have been talking about Māori, inequality, housing, and the previous speaker, the Hon Willow-Jean Prime, was talking in te reo about giving with one hand and taking with another. Well, actually, this is just about allowing New Zealanders to keep more of their own money and getting Government out of the way. I ask myself, “Why didn’t we do this 14 years ago?”—why didn’t we do this? Fourteen years. And then I see we did under Sir Bill English and Steven Joyce. We actually did in 2017, but that Government reversed it. Well, here today, we’re getting it back on track.

Hon WILLIE JACKSON (Labour): I just was going to translate for some of the crew on the other side. What the Hon Willow-Jean Prime was saying was this was a rotten, useless Budget for Māori. So I just thought I’d do that for you because I see some of you looking up in the air. It is probably the worst Budget for Māori in my lifetime. And I’m looking on the other side and I’m thinking, “Now, which Māori are responsible for this on the other side?” You know, there’s one or two there, not quite sure if they are Māori—I’ve heard them waffling on. Mr Meager doesn’t know what day of the week it is when he’s a Māori, even though he’s the “great brown hope” according to some of his mates in the media, but he’s not quite sure of himself. He’s like Seymour, who accidentally sort of found out about his Māori side, according to Winston Peters—bit like Abel Tasman, I think Winston said, didn’t he?

But really, this is a shameful, shameful, Budget. We were doing the numbers, Madam Speaker—it’s good to see you there, Madam Speaker.

DEPUTY SPEAKER: It’s good to hear you talking about the numbers, Mr Jackson.

Hon WILLIE JACKSON: Oh, I’m absolutely talking about the tax bill—absolutely, this is all about the tax bill, Madam Speaker. Totally reject this tax bill because we know what they’ve done in terms of financing everything. They’ve looked after their rich friends with $2.9 billion, and they’ve kicked all the Māori people in their guts all around the country. Now I’m looking over there; I look at the Hon Mark Mitchell. Now, Māori had some hope for him, but now he just wants to lock us all up and do his hard-on-crime thing. I’m looking across, I can’t see any hope. Tama Potaka should hang his head in shame after this pathetic—

DEPUTY SPEAKER: Hey, hey—how about we don’t do too much personal stuff?

Hon WILLIE JACKSON: I can’t help it, Madam Speaker—

DEPUTY SPEAKER: I know, but I’m going to have to sit you down if you get too personal.

Hon WILLIE JACKSON: Oh, I’ll get off that then, Madam Speaker. But I was going through how they funded this in terms of tax, and I saw a cut of $40 million in terms of Māori housing—$40 million. By Māori, for Māori solutions has been a huge success—we had Minister Potaka up there on the East Coast. Sadly, that’s been cut. Also a cut of $20 million in terms of rangatahi—young people—transitional housing; massive cuts in terms of the homeless action plan; Māori development budget cut by $9 million. And this other side are very proud of this—$43 million of increased funding for core services. Basically, the Government is robbing Hōne to give to Peter and Paul—that’s very, very clear. They’re giving a pitiful tax cut with one hand and mugging you with the other hand. See, what’s the point of a $12-a-week tax cut—see, I’m coming on to the tax cuts—

DEPUTY SPEAKER: Yep.

Hon WILLIE JACKSON: Yes, I’m doing that for you, Madam Speaker. What’s the point of a $12-a-week tax cut if you have to pay $13-a-week in terms of transport for your kids? That’s all we’re talking about here. [Interruption] Yeah, that’s right. Then the changes will leave beneficiaries behind; almost 30,000 more job losses—that’s not particularly successful; more kids into poverty; the Prime Minister is getting twice the tax cut that the minimum-wage earner gets. And they’re calling this a success. But it upsets me that when I look at the, you know, the “pride and joy of Māoridom” over there, Mr Meager, you should have done a lot better on this. You know, we’ve got a lot of hope for you and the media puts you up there as a “great brown hope”, and you should have done a lot better for us here, but you’ve done nothing. Māori trades training—Māori trades training has been a huge success. You know, Mr Mitchell knows about that; he’s about around that age group when it first came out, he knows all about it. Mr Mitchell knows all about Māori trades training—huge success. Gone, gone, everything gone, so they can look after their rich mates.

Now a disabled person will be up to $256 per fortnight—or $5,742 a year—worse off because of the Government’s changes to disability support, public transport subsidies, benefit injection, the minimum wage, and promised prescription charges.

Hon Jo Luxton: Shameful.

Hon WILLIE JACKSON: That is shameful. And they’re all patting themselves on the back today, clapping their leader. How can you be so proud of something that has been so unsuccessful? They don’t have money for the environment, renters, and beneficiaries, but they do have money for their rich landlords. This is a landlords, landlords, landlords Budget. Shame on a lot of them.

Now, on the three official child poverty measures: for the first, there’s no forecast of future numbers; on the second, the numbers will stay the same; and on the third, they will rise. So child poverty will stagnate or worsen—we already know that.

Cameron Luxton: Did it get worse under your watch, Willie?

Hon WILLIE JACKSON: Pardon?

Cameron Luxton: Did it get worse under your watch?

Hon WILLIE JACKSON: I couldn’t quite pick that up. But all I know is that is the ACT Party, whose priority are their rich mates, not the workers out there, not the Māori nation, certainly not the struggling. Now, the Budget Economic and Fiscal Update 2024 projects the economy to come out of recession and then growth to drop downwards 3.2 percent in 2026, 2.9 percent in 2027, 2.7 percent in 2028. So where’s the rise in the growth? Where’s the vision from a Government that cares beyond their donors and rich landlord mates? That’s the question. They seem to think that a $12 tax cut for minimum-wage earners and 40 bucks for median-wage earners will make the electorate forget about the Government’s climate-destroying, bashing agenda because we know where it’s all at.

Things are not going well for this Government. I mean, they’re even down on the Roy Morgan poll. Madam Speaker. This is a poll—

DEPUTY SPEAKER: That’s a different set of numbers, Mr Jackson.

Hon WILLIE JACKSON: Oh, is that a different set of numbers?

DEPUTY SPEAKER: Yeah.

Hon WILLIE JACKSON: Right, come back to it. But, really, this is a tax bribe; not one cent—see, when I talk about funding, when we were looking at the Budget today, we found in Minister Potaka’s budget that he was $90 million down in terms of Māori development—$90 million down. That’s terrible for the Māori development budget when you have Māori development funded at around about $600 million a year. So he’s $90 million down, but they’ve said to him, “Oh, well, we’re giving you a bit of extra money for those haka people, Tama. So you should be happy now.” And so those dancing Māoris have got a few more dollars, and so Tama’s really happy with that. Meanwhile, funding’s been cut right across the spectrum. I like Tama very much, but shame on him and shame on the other Māori members across the House when you’re down $90 million in the Māori affairs portfolio. But then when we did the numbers right across the spectrum—former Minister Megan Woods did some wonderful work in the housing area. Very, very happy with what she did. [Interruption] These idiots can laugh, but we know we’ve built more houses—more houses—than anyone else.

Stuart Smith: Point of order.

DEPUTY SPEAKER: I’ve got a point of order from Stuart Smith.

Hon WILLIE JACKSON: Sit down, Stuart Smith.

DEPUTY SPEAKER: No, no. I’ve got a point of order from Stuart Smith.

Stuart Smith: Madam Speaker, he’s using irony in the House—is that allowed?

DEPUTY SPEAKER: I think, actually, we might all just calm down a little bit because there was a lot of shouting going on backwards and forwards. And if you want me to hear Mr Jackson using irony, we’ll just take the tone down a little bit.

Hon WILLIE JACKSON: OK, well, I mean, Stuart Smith is the irony, if we really want to be clear about it.

DEPUTY SPEAKER: No, no, no, that’s personal—

Hon WILLIE JACKSON: He’s quite a—

DEPUTY SPEAKER: Keep going with—

Hon WILLIE JACKSON: I want it to be personal, Madam Speaker. He is irony.

Stuart Smith: Point of order. It’s “Mr Irony”, thank you.

DEPUTY SPEAKER: OK.

Camilla Belich: Point of order. Madam Speaker. I know that there’s banter in the House, but this is a serious matter. I don’t think that that member’s use of a point of order is appropriate in this debate, and I would prefer you to be able to rule on the appropriateness.

DEPUTY SPEAKER: That’s relevant, thank you. We’ll have no more points of order on that matter. And we’ll have everything in the space of the numbers regarding the Budget from Mr Jackson for the next 1½ minutes.

Hon WILLIE JACKSON: Thank you, Madam Speaker. Well, it’s very, I suppose, disappointing, for us. As I said, $90 million has been lost in the name of tax cuts in terms of Māori development, but actually $300 million has been lost in terms of Māori funding right across the spectrum. This was picked up in the media conference today by Claudette Hauiti, rejected by the Minister of Finance, but never have we seen in a Budget Māori funding go back so much—$300 million. We will get the story out there—they can reject it all they like and confuse the silly Māoris in their party and say, “Oh, you got the kapa haka money.”, but we actually know how to read Budgets and $300 million is a kick in the guts for Māori.

You saw the level of protests today: thousands and thousands of Māori—thousands of them—are hitting the streets because they see these sell-outs on the other side and they’ve had enough. This is going to be a very, very short term for this useless, race-baiting, right-wing Government who don’t care about Māori, who don’t care about workers, who are just focused on their rich mates, and we’re looking forward to the next poll. Kia ora, Madam Speaker.

NANCY LU (National): I wanted to say to the Pakuranga couple right now at home watching this live on TV, to Yali and Issac: thank you for sending me your screenshot and telling me your plan for the annual saving of $3,029 that we have announced for you and your family today. Thank you. Thank you for telling me that you will be able to get your sons—your two children—to two extracurricular activities every week and take them to the zoo. But you know what? Don’t thank us. Members on this side of the House want to say thank you for voting for us and giving us your trust to be the responsible Government for your hard-earned money. So, with that, I commend this bill to the House.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Bill read a second time.

DEPUTY SPEAKER: This bill is set down for committee stage immediately. I declare the House in committee for the consideration of the Taxation (Budget Measures) Bill.

In Committee

Part 1 Income Tax Act 2007 amendments commencing 1 April 2024

CHAIRPERSON (Greg O’Connor): Members, the House is in committee on the Taxation (Budget Measures) Bill. Members, we start with the debate on Part 1, the debate on clauses 3 to 7, “Income Tax Act 2007 amendments commencing 1 April 2024”. The question is that Part 1 stand part.

STUART SMITH (National—Kaikōura): Point of order. I seek leave for all provisions to be taken as one question.

CHAIRPERSON (Greg O’Connor): Leave is sought. Is there any objection? There is.

Hon Dr DEBORAH RUSSELL (Labour): Mr Chair, thank you. There’s a fair amount to absorb in this bill and we’ve only had it in our hands for a few hours. I do appreciate the efforts to which the Government went to ensure that the bill was actually available to us from 2 p.m. So that was a generous gesture, and I think it has made—well, it’s still a lot to absorb in a few hours. We’ve had a lot of conversation, in the last two readings of the bill, about the generalities of this bill, and it is trying to get into some of the specifics, which I very much want to do now.

Part 1 amends the Income Tax Act 2007. I’m just trying to find my way to clause 3 because I know I had something I wanted to ask about that clause 3. We’re amending—I know it was—oh, it must be clause 4. So there’s a whole lot of stuff there in clause 4 where we’re inserting new sections LC 14 and LC 15. Now, those sections of the Income Tax Act 2007 are to do with the various tax credits that are available.

So LC 14 is the amount of the tax credit for independent earners for 1 April 2024 to 30 July 2024, and then new section LC 15 is the amount of the tax credit for independent earners for 31 July 2024 to 31 March 2025. These are really unusual dates. They are really unusual dates to appear in a tax bill. The dates are normally, like, you know, the first of a month or maybe the last day of a month, and the dates that we normally expect to see in an income tax bill are dates like, you know, 1 April, which is the first day of the tax year, or 31 March, the last day of the tax year. We might see dates like, maybe, you know, 1 October, because that’s halfway through. So we’d normally expect to see the beginning, the end, the quarters, but in this one—so this is the tax credit that’s available to independent earners.

Now, that’s a tax credit that’s designed for people who are working. They’re in what’s called full-time—you know, deemed to be full-time work. They’re not on an especially high income; though, I note that now the independent earners tax rate will go up to—it only fully abates at, I think, $70,000. I’ll have to check that with the Minister at some stage.

Hon Simon Watts: $70,000.

Hon Dr DEBORAH RUSSELL: Oh, it abates up to $70,000. So what it’s done is it’s for people who get no other form of tax credit. They’re not on benefit, they’re not getting superannuation, they’re not getting any of the other tax credits, and it just gives a little bit of extra to people who are, you know, earning their own income and it just gets them a little bit further along.

But the bit that’s really curious is that date. It’s a really, really unusual date. I’d like the Minister to explain why that particular date has been chosen—in new section LC 14, 1 April 2024 to 30 July 2024, and in LC 15, 31 July 2024 to 31 March 2025. So there’s obviously all that sort of stuff going on in there. But, of course, those are dates that are related to a tax year. I guess the difficult or interesting thing was it will be in relation—not just the particularly curious dates, but how it’s going to work for someone who has an income year that is different from the standard tax year. So what dates are going to apply in that case? So that will make a bit of a difference as well. I sort of just want to see what the impact of the income year versus the tax year is there. So I’d like the Minister to explain that. Is there somewhere else? We’ve got some curious dates aligned to these curious dates—which, you know, just to see why it’s all set up that way.

So if the Minister could explain, I would be very grateful to know exactly why, in this very first set of things we’re debating, having a little bit of a look at, we’ve got those very, very unusual dates.

RICARDO MENÉNDEZ MARCH (Green): Thank you, Mr Chair. I appreciate the opportunity to take a call on Part 1 of the Taxation (Budget Measures) Bill. Mr Chair, I know this is in urgency and we haven’t had a select committee, so you’ll forgive me for asking questions that also would have been of the nature that we would have had answers to in a select committee process.

First of all, I was interested in, in Part 1, whether a distributional impact analysis had been done around the changes to independent earners. This is something that I’ll seek answers to in other parts of the bill, but if there’s anything to the provisions in Part 1, that would be quite useful. The reason why I’m asking is because this bill, altogether, has been touted as a cost of living relief bill, and I think it’s important to get a sense of what level of analysis the Minister received when it came to the distributional impacts. I know that in Part 1, we’re mostly talking about independent earners and the changes around that, but, at the end of the day, that is still a section of the population that is worth considering.

Also, around the changes to the abatement rate, I did want to get a sense of whether any exploration had been done around other parts of the system and how those interact—say, for example, if somebody’s receiving an accommodation supplement.

Then the other thing on Part 1 that I want to test is whether there had been anything in relation to a child impact assessment. We have received, in the overall Budget, information regarding child poverty levels, but, obviously, as part of any legislation process there is the ability to seek advice on how a piece of legislation may impact children very specifically. I’m curious to know whether a child impact assessment—which is a tool that could be used, for example, at a select committee stage—was used, and, if so, I’m keen to get the Minister’s analysis around exactly how he thinks Part 1 would impact children specifically. I know that we can use this tool for any type of legislation, but obviously legislation that has to do with income and tax has quite a direct impact on children’s livelihoods.

Then the other thing I’d like to ask is in relation to distributional analysis. I’m keen to get a sense around whether he received advice around how many people in the country are within that range of that $0 to $14,000.

I did want to check whether, for example, he received any advice from Whaikaha around disabled people with carers or people who may not even be eligible to income support who are disabled—for example, people who are in a relationship with someone who has an income yet will not be eligible to any income support, and therefore won’t necessarily receive an income. I wanted to check whether he sought any advice from Whaikaha around how disabled people would feature alongside these changes.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Mr Chair. I’m seeking to engage with the Minister of Revenue in a back-and-forth line of questions about this Part 1, particularly clause 4 and the dates in that clause. May I, first, ask the Minister: will people receive this benefit on 31 July?

Hon Dr MEGAN WOODS (Labour—Wigram): Thank you, Mr Speaker. I’ve got two quite specific questions for the Minister in the chair, Simon Watts, that and it would be useful for us to get an answer reasonably early on so we can get on to further lines of questioning. The first that I want to ask the Minister—and apologies if it is in some of the regulatory impact statement work and we haven’t had a chance to uncover it yet, but, of course, any tax changes that have the impact of, effectively, raising people’s incomes will have flow-on Government savings, in terms of the eligibility for other benefits, for example. So, across Government spending, what other incomes that are assessed after tax income will there be savings on, and has it been calculated what the net cost to Government will be with those savings factored in?

The other question I have for the Minister relates to clause 7(1) of the bill, with Table 1, which has some very unusual tax rates through there—nothing that meshes with what our effective tax rates are in New Zealand, or, indeed, our marginal tax rates. We’re seeing some tax rates of things like 12c—that is not a tax rate in New Zealand, so I would like to know from the Minister why it is that these have been calculated in this way, and why they’re appearing in this table with these very unusual rates that don’t correlate to the New Zealand tax system. Is it something to do with the date of introduction? Is it an averaging out because this is coming in? As my colleagues have pointed out, there’s some unusual dates that we’re not used to seeing in tax legislation in this bill. So is there something to do with the fact that it’s needing to smooth out what isn’t correlating to what we’d see as the normal run of a tax year? Very interested to find out the answer to that and also what the effective savings to Government are.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, members, for those questions. I’ll come first to Arena Williams’ question. The answer is yes to your point around 31 July.

The Hon Dr Deborah Russell and the Hon Dr Megan Woods both had questions in regard to dates. The key objective of this coalition Government is to effect and implement the changes in the income tax rules as soon as practicable, but one of the practical considerations around that is the time that it would take for payroll providers and other large entities that play a role in regards to that because of, obviously, the Budget sensitivity considerations—to ensure that they were set up to be able to effect those changes. The practical time period which we felt was appropriate, in conjunction with feedback from them, was the period of three months, and hence why it is the date of 31 July. So it’s simply a reflection of the practicality of allowing the broader system to be prepared to implement the change while acknowledging that the key objective of providing tax relief to hard-working New Zealanders is to deal with and provide them with that relief as soon as possible to alleviate the issues that they’re facing under the cost of living crisis, and so the balancing of those two aspects was pretty central.

In regards to questions from Ricardo Menéndez March around the child poverty reduction impacts, the modelling—

Ricardo Menéndez March: Child impact assessment.

Hon SIMON WATTS: Yep, yep—

Ricardo Menéndez March: It’s its own thing.

Hon SIMON WATTS: Oh, child impact—OK, right. Well, I’ll come back to the member in regards to that. The Treasury’s model cannot forecast the material hardship considerations, but there was a broader assessment, which the Minister of Finance noted today.

I think another question was in regards to distributional impacts as well, and Treasury have made some broader comments around that.

There were also some questions in regards to some of the abatement rates, I think. I wasn’t necessarily sure exactly what the member was referring to, but in regards to the practical considerations around how the abatement thresholds would operate, they are consistent conceptually with the prior way in which abatement thresholds operate—i.e., they abate the closer one gets to the maximum threshold. That is consistent; we’ve simply just moved the threshold numbers around. So the overall methodology of an abatement has not changed; it is just the base numbers which we have utilised.

That’s pretty much the questions that I’ve got. I think there was one more from the Hon Dr Megan Woods, and I’ll come back to you, now that I’ve just thought of it.

CHAIRPERSON (Greg O’Connor): I’d just remind all parties that the preferred, but not mandated, way of doing this is to do a question and answer, as indicated by Arena Williams. However, I am aware that it takes all parties to indulge in that.

ARENA WILLIAMS (Labour—Manurewa): Mr Chair, thank you. Given the Minister’s answer to my question—yes, people will receive this benefit from 31 July—and he also elaborated a little in his answer on his preparations with payment providers. My second question is: given that he said it’s three months, that doesn’t seem to allow three months for the passage of this bill should he not accept my amendment which would extend this for another month.

Then my next question for him is: if people do not receive the benefits on 31 July, will they be eligible for back payments? So I guess my fourth question for the Minister is: has he done any thinking around how people will receive back payments and whether it will be necessary to prepare his officials to engage with something like that being needed, given that his dates are incredibly tight in the legislation he’s introduced to the House today?

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Mr Chair. Look, I hear the member, but, as I’ve articulated, the coalition Government’s priority is to actually deliver tax relief to hard-working New Zealanders as fast as practical. An amendment which is going to look to extend that time in order to provide that tax relief doesn’t seem to correlate with the intent of getting those payments out there as fast as practical.

What I’ve outlined there clearly is we have undertaken assessment of the time it would take to practically make those payments. We’ve got an assessment around that time. That date is as of 31 July; that is practical. We’ve got confidence that we can deliver upon that and we will deliver upon that. So I’m not going to be accepting an amendment that looks to extend that further out into time. That just simply wouldn’t make any sense.

CHAIRPERSON (Greg O’Connor): The Hon Megan Woods. Sorry, she didn’t stand up. The Hon Deborah Russell.

Hon Dr DEBORAH RUSSELL (Labour): Oh, thank you, Mr Chair. I mean, I do really admire my colleague the Hon Dr Megan Woods, but we are different people. I want to continue to focus on this commencement date of 31 July. Now, the Minister has given, as the reason for commencing this towards the end of July, early August, whenever—it was to do with payroll providers and whether or not they could get their systems into place and up and running in time to be able to deliver the changes to the income tax thresholds and the changes to the independent earner tax credit and the changes to all the things that get changed when you change tax rates around. But 31 July is still a really odd date.

Hon Kieran McAnulty: Isn’t it?

Hon Dr DEBORAH RUSSELL: It’s a very odd date. It’s very odd because, as I said before, when tax threshold changes go through, they normally go through from the first of a month, right? That would be sort of the usual and regular thing to do. Not only that, they normally go through from the start of a quarter, at least—or I can recall changes that have gone through on 1 October, or changes that have gone through on 1 April, and so on. But 31 July is a very unusual date. So I thought, well, maybe it’s to do with the day of the week or something like that, but 31 July is a Wednesday.

Hon Kieran McAnulty: Is it the Minister’s birthday?

Hon Dr DEBORAH RUSSELL: I can’t work it out. Again, you might think it might go from a standard work week or something like that—though, there is really no such thing. But it seems like an odd date.

Now, I get the explanation that was given that was to do with finding a date that payroll providers could work to, but why not 1 August? I’m serious about this. Or why not a date that corresponded with the start of a week or something like that? He has not yet explained why this very, very odd date. It is unusual.

So I get the lead time. I get that. That’s an issue. So there is this date around this—very unusual date. I would like to hear an explanation for why 31 July as opposed to 28 July or 3 August or whatever—you know, something around there. There must be a reason for it other than that someone stuffed their finger in their ear and thought that would be a good date.

I want to know a little bit more about the payroll providers too, because, again, I get that third-party payroll providers do take time and effort to get those changes through. There is a lead time associated with making tax threshold changes. There are complex systems that need to be worked through in order to get those changes in place. I know that Inland Revenue has extensive experience in working around tax threshold changes. There’s a lot of knowledge around about how to do it. We kind of know what the lead times more or less are. But in terms of third-party payroll providers, there’s the third-party payroll providers, which the Minister referred to, himself, but I was also wondering, it’s not just the third-party payroll providers; it’s some of the really, really big employers we have within Government, all right? So if we think about some of our Government entities, there’s employers like the ministry of social welfare, there’s the Ministry of Social Development, there are employers like IRD itself, there is Kāinga Ora—who else has got a huge payroll? Defence.

Hon Dr Megan Woods: Well, not many now, because they’ve all been cut.

Hon Dr DEBORAH RUSSELL: Well, of course, payrolls—but some of these entities actually have very, very large payrolls themselves. So, obviously, the Minister consulted, or his officials, with third-party payroll providers, but I wonder if the Minister could tell us about what consultation was undertaken with some of these very, very large employers who do their payroll themselves, because that’s what they do, you know, within the Government themselves, and what consultation was there.

I just want to remind people, of course, for the obvious reason, that we haven’t had a select committee stage on this, that this is our chance to examine some of these sorts of issues. So I really would like us to have an answer to these and a bit of reassurance, actually, that they have spoken to them. I get that the Minister will be confident that the payroll providers have said they can do it by this date. What I want to know is that other large employers can also get these payments, these new tax thresholds into place by that time.

INGRID LEARY (Labour—Taieri): Thank you, Mr Chair. I’ve got a question that has been perplexing me, and I’d really like to know if the Minister has turned his mind to it. It is to do with new section LC 14, “Amount of tax credit for independent earners for 1 April 2024 to 30 July 2024”, which is inserted by clause 4. Subsection (2) talks about the formula being a “(person’s credit − full year abatement) × credit period days ÷ 365.” There is also a reference in subsection (5) to the tax year; in subsection (6) to the tax year, the tax credit tax year; and then in subsection (6), “ Credit period days is the number of whole days in the credit period.”, and then it says, “Defined in this Act:” and it talks about the tax year.

Now, this is very specific to a period of time before we get to the beginning of the financial year and my colleague the Hon Dr Deborah Russell has referred to payroll systems and the mechanisation of some of these formulas. We have seen, in Health New Zealand’s payroll system, and also in education, years and years of problems with not being able to determine payroll-type situations because of mechanisation and because the systems have not been able to allow for shift work and so on. So when I ask this question, it’s very genuine. We’re talking about a very specific period of time. This is a leap year. There are 366 days. This credit period here says “365”. Now, I know that it’s not the whole year, but if we are talking about a defined period of time in the Act, then it would seem out of fairness and accuracy we should have actually had 366 days. So I’m curious to know why the Minister has opted for 365.

Did anybody actually turn their mind to this, and is it something that you would normally turn your mind to, and, if not, why not? The reality is that we’re in a leap year and this is a real calculation that people will be doing on their earnings. We know that the Inland Revenue Department tries to be as fair as possible. I know, for example, that sometimes people have got tax returns sent back to them. In the old days, people would get a cheque for 39c in the mail to say, “This is your fair entitlement.” That is how fair the Inland Revenue likes to be, because this is about numbers—numbers are accurate—and I do not understand why, in a leap year for a specific period of time under new section LC 14, there would be a reference to 365 days to do a calculation that is somehow going to be wrong.

Is that fair? Did the Minister turn his mind to it? Did he seek advice on it, and will the systems that are used to calculate this be able to do so in a fair way given the realities of the fact that we have an extra day this year?

Hon SIMON WATTS (Minister of Revenue): Thank you, Mr Chair. I am conscious that I am repeating myself, but I will for the final time in regards to this date, because the date seems to be quite complexing for members of the Opposition. The date that was chosen will facilitate the fastest period of time in which this coalition Government can deliver tax relief to hard-working Kiwis. The consultation that we undertook, including with the Ministry of Social Development, including with ACC, including with the Ministry of Health, and all of those large Government departments indicated to us that that date period would provide them with adequate time in order to ensure that they could make those changes. So we did undertake consultation with large Government departments, which was a question from the Hon Dr Deborah Russell.

The other aspect in regards to payroll providers—yes, we did consult with them. Their feedback to us was that 31 July was a sensible period of time for them to effect the changes. So on that basis, that’s why we put in place this date. We have not had changes in tax thresholds since 1 October 2010. So the criticality of getting these tax changes in play, into the back pockets of hard-working Kiwis as fast as is practical, is what’s driving this Government. I don’t think that’s unreasonable. Actually, I think that’s quite practical. That’s why, on this side of the House, we are a practical Government. We’re trying to get in place these tax changes as fast as possible, and that’s all we’re doing. That’s all we’ve done. I’m not sure where the Opposition is coming from in terms of asking why we don’t take longer.

Hon Dr DEBORAH RUSSELL (Labour): Thank you, Mr Chair. I do want to remind the Minister the Hon Simon Watts that he hasn’t as yet answered my colleague Megan Woods’ question about clause 7. The standard income tax rates—10.5 percent, 17.5 percent, 30 percent, 33 percent, and 39 percent—are the tax rates that sit in the income tax scale as it is at present, and the income tax scale as is going to be proposed by this bill. Those are the numbers you’d expect to see in the legislation, but if we go to Schedule 1, the income tax rates we see there are 10.5 percent—well, it’s expressed as 0.1050. Putting this in percentages, it’s 12.82 percent. That’s neither 10.5 nor 17.5, or anything like that. Then it’s 17.5. Then the next tax rate there is 21.64 percent. It’s like the unusual date; these are unusual numbers.

Anyone looking at this bill would be looking to see the standard tax rates, and they’d look at this and they’d go, “Why are these numbers sitting in there?” The next one is 30  percent. That’s a standard tax rate; we’ve had that in place for a long time. But then the next one is 30.99. So you sort of think, “Where has that number come from?” I’m going to hazard a guess as to why it’s there. It’s because they’ve got this unusual start date, and so there is something going on there. But I would like to know where the Minister gets those numbers. Again, I just want to know where those unusual numbers do actually come from. Now, this is a question that my colleague Megan Woods asked, and it hasn’t been answered as yet.

Sitting in the same sort of space—and this one has really got me curious, because actually I couldn’t work this one out—

Hon Dr Megan Woods: You’re a curious person.

Hon Dr DEBORAH RUSSELL: I am a curious person. We’re told that these new tax rates are coming in from 31 July, but if we go to clause 6—now, we haven’t discussed clause 6 yet, so I would like to have a look at clause 6—clause 6 concerns fringe benefit tax (FBT). Actually, the numbers around fringe benefit tax are quite confusing in themselves, and we haven’t discussed this yet.

The way FBT is calculated is rather complex, but the bit that really gets me, and that I find really curious, is that sitting in the commentary on clause 6—now, this is sitting in the bill commentary—it says that it’s going to start in place from 1 April 2024. Now, the commencement date itself is interesting, but there must be a mathematical reason for that, or some reason why the FBT rates are going to start from that particular date. It must be to do with their relationship to the income tax rates, and the timing of the year, and things like that. So I would like to have a little bit of a discussion from the Minister as to that relationship of the FBT rates to the income tax rates, and in particular, again, that date—why 1 April 2024 when the rest of it is 30 July?

Again, there’s a disparity there. I would like the Minister to explain why it’s there and, if he could, I think, especially those questions that my colleague the Hon Dr Megan Woods raised. They have not been answered yet.

Hon SIMON WATTS (Minister of Revenue): Thank you very much to the member for those questions. Going back to the original questions by the Hon Megan Wood—

Hon Dr Deborah Russell: Woods.

Hon SIMON WATTS: —Woods; sorry, the Hon Megan Woods—about why the rates are a little bit different, well, the member the Hon Dr Deborah Russell actually answered the question. It’s because there are, in effect, two sets of rates in one year, and as you’d expect, we need to do a composite set of rates to take into account to get the full-year effect. So what you’re seeing in that table is the composite set of those two rates. The Inland Revenue Department has calculated those, and that is the method behind that table. So I hope that covers off that question.

On the question in regards to fringe benefit tax (FBT)—if I recall rightly—there have been changes to the FBT thresholds, which will flow through from 1 April 2025. There is a technical change in regards to the attribution calculation in the area of the way in which FBT is calculated, and some of those changes will apply from 1 April 2024. This change simply refers to the fact that the employers are paying the correct amount of FBT given the changes that apply to personal income tax rates for FBT. So they apply from different dates. That’s the reason why you’re seeing the implication in regards to those aspects in the FBT aspect of the calculation.

Hon Dr DEBORAH RUSSELL (Labour): A couple of questions following on there. I just want the Minister to clarify, because I’m assuming it was a slip of the tongue, because he said those fringe benefit tax rates—if we check the Hansard you’ll see that this is what he said—was that applied from 1 April 2025. But I would like to clarify that that was just a slip of the tongue because the bill commentary that I was discussing in relation to clause 6 does say 1 April 2024. So I’m hoping that was just a slip of the tongue. So that was a very simple question. So just that very simple question there, please.

RICARDO MENÉNDEZ MARCH (Green): Thank you, Mr Chair. I know that the Minister in the chair, Simon Watts, has been taking advice back and forth, so this is not with the aim of sounding repetitive, but I am interested, in Part 1, whether a child impact assessment had been done, and I also wanted to understand whether any conversations had been held with Whaikaha. Again, I know the advisers are kind of moving back and forth, so I just want to make sure some of those things don’t get lost.

On the independent earner tax credit, I did want to ask whether he had seen any evidence about whether the effective marginal tax rate generated by an abatement rate of 13c in the dollar for the independent tax credit as a result of also changing the abatement rate of the Working for Families credit and, potentially, the accommodation supplement—I think what I’m going at here is around—

CHAIRPERSON (Teanau Tuiono): Can I ask the member to get closer to the microphone. We’re having trouble hearing you.

RICARDO MENÉNDEZ MARCH: Of course I can, sure.

CHAIRPERSON (Teanau Tuiono): And maybe just slow down a bit.

RICARDO MENÉNDEZ MARCH: Sure. Look, I’m trying to use the time, and, you know, as a member who, I think, tries to not repeat points, I’m trying to fit in as many questions as I can, but thank you, Mr Chair. So I wanted to get a sense of the interactions between the abatement rate and the independent earner tax credit in relationship to other parts of the system.

The other question I had was—and I know the dates have been traversed, but around the distributional analysis, and, again, that hasn’t really been touched on. I know there’s been a lot of commentary in the media around, for example, superannuants not being particularly better off as a result of this bill, but going back to the personal income tax threshold changes, I did want to get a sense around, you know, whether he has confidence that this bill in isolation isn’t actually leaving those lower-income earners behind.

I go back to my point. We’ve seen the Budget analysis on child poverty rates, but there are child poverty implications with, particularly, the tax threshold changes and including, potentially, the independent earner tax credit. This is why I want to expand on why I’m focusing on the impact of children in this legislation, because we haven’t really received a super thorough analysis around the impact on children in this legislation alone. I know we’ve been encouraged to think on the impact on children in the whole Budget, but the Minister has yet to address my point.

I want to go back: this is not around child poverty in and of itself; this is also very specifically to whether the Minister requested a child impact assessment.

Hon SIMON WATTS (Minister of Revenue): So the answer to the member’s question is, no, we didn’t look at the child impact assessment implications in regards to this bill.

In regards to the question from the Hon Dr Deborah Russell, what I was referring to is that, normally, the next time the fringe benefit tax charges would take effect is from 1 April 2025, but the changes in regards to the attribution model changes, because of the changes we’ve made to the personal income tax, will be from 1 April 2024, and so that was the context in which I was outlining.

TOM RUTHERFORD (National—Bay of Plenty): I move, That debate on this question now close.

CHAIRPERSON (Teanau Tuiono): There is quite a lot of material that still needs to be covered, so I will not be taking a closure motion at this time.

Hon Dr MEGAN WOODS (Labour—Wigram): Thank you, Mr Chairman. One of the things that I’m interested in—again, apologies to the Minister if it is in some of the associated materials; we haven’t got to it yet but maybe the Minister, either himself or through his officials, can point us to where that analysis is in the accompanying documents.

What we heard today, where the Government announced the tax measures that are covered out in Part 1, which lays out the rates of these taxes with a number of scenarios—and in some cases, the number of families and individuals that would benefit from different scenarios within the tax package that is in this bill. So what we heard was that average income households would receive tax relief of up to $102 a fortnight and eligible families would receive a FamilyBoost childcare payment of up to $150—accepting that the child boost is in the next part of the bill, and I’m not asking questions about that.

What I would like to know: was there modelling done on the number of families within a variety of different scenarios? So, for example, how many families will be receiving the maximum? Are there families that will be receiving the $250 a fortnight that was talked about on the election campaign? How many families will be receiving what the Minister indicated in her speech in the House today that these tax cuts would deliver of the $60 a fortnight? What are the brackets of numbers of families and individuals throughout the country, and has any analysis been done?

I guess in many ways it flows on from some of the questions that my colleague Ricardo Menéndez March has been asking in terms of what this does in terms of the number of families in work and not in work, given there is a change to that in-work tax credit. Does that open up differentiation further between poverty levels between those families that are in work and not in work?

So we would expect in select committee, this is just the kind of analysis that we’d go through to look at what the distributional impacts would be across the number of households; whether there has been any geographic breakdown in terms of where it is that we will see the clusters of families that will be receiving either above average or below average tax relief—well, it’s not relief—the tax cuts that are delivered through this package.

So these are the kinds of things that I think that as a committee who is scrutinising this legislation in the absence of a select committee process; that in this committee of the whole House, these are just the kind of understandings that we as legislators need to know. Who is going to benefit? How many people are going to benefit?

James Meager: Everyone.

Hon Dr MEGAN WOODS: Where are they? We have members opposite who are saying “Everybody.” Well, let’s see the modelling. Can the Minister please point to the modelling that shows us where “everybody” and how many—are we talking households? Individuals? People? There are a lot of pieces of information that we need, and I would think that members opposite might be interested in knowing whether their constituents indeed are going to benefit or they are going to be worse off.

So they’re things on this side of the Chamber that we do need to understand, and we know that some of this must exist because the Minister used it in both media materials—not this Minister, but the Minister of Finance today used it in both media presentations and press releases and speeches in the House when she talked about various scenarios. For some she gave numbers but not others, so we would be very interested in understanding what that looks like.

Hon SIMON WATTS (Minister of Revenue): Just in response to the questions by the member: yes, a wide range of distributional impact analysis was undertaken in regards to the preparation of the scenarios and the different scenarios that you would expect to see across this Budget. A number of those specific scenarios was and is included within the fact sheet that has been provided out as part of the supporting material for this Budget, and there are circa nine examples there.

Obviously you can’t publish every single scenario because there’s a wide range of those, but the member will know, no doubt, that that work has been undertaken and we’ve published a number of those ones which provide a wide spectrum of range of how the impacts could be felt by different participants and different members of our community.

Hon Dr MEGAN WOODS (Labour—Wigram): Point of order, Mr Chair. Thank you, and I thank the Minister for that answer. While I appreciate every piece of paper of analysis can’t be tabled, but the Minister has confirmed to us that distributional analysis that does give some of that numerical breakdown exists. I’d ask the Minister if he would table that so the committee could see it—not the summaries that are in the fact sheets but the more detailed breakdown of the number of households. I think the committee would benefit from seeing that distributional breakdown.

CHAIRPERSON (Teanau Tuiono): Just speaking to the point of order, it appears the Minister does not have that document with him at the moment, but he might be able to table it at a future date.

Hon Dr DEBORAH RUSSELL (Labour): I want to follow on from my colleague the Hon Dr Megan Woods’ contribution just now, and actually it is drawing a little bit on the contribution that was made in the second reading of the Taxation (Budget Measures) Bill by my colleague the Hon Willie Jackson, when Mr Jackson raised a really valid concern around the impact of this Budget on Māori and to what extent this Budget had a Māori focus to it—a Māori budget. In previous years, we’ve had a Māori budget. We’ve had analysis that shows the impact on Māori, and we don’t seem to have had this time. There is clearly going to be an impact on Māori from these changes to the incomes tax thresholds and from the change to the independent earner tax credit, and from the changes to the family tax credit.

What I’m interested in knowing is, along with those distributional analyses of households and how households have been affected—and the Minister has just told us that this work does exist, and so we will be seeking that work. If the Minister is able to table it at some stage—obviously not now, but in the next day or two—that would be fantastic; otherwise, at some stage soon. What I want to know from the Minister is: if there was an analysis done of that distributional impact to show whether there is a differential impact for Māori households, as opposed to other households, I think that’s quite important for us to know. We know that there is a long history of Māori being treated unequally in this country, ranging back to the Depression, when Māori weren’t eligible for a lot of the relief that was on offer then and were told to go back to their marae. So it remains an important question for us to understand whether these changes will equally benefit Māori. In addition to that, I think it would be useful to know whether there was an analysis of Pasifika families.

Now, one of the difficult things around this is, of course, I’m not sure that Inland Revenue (IR) collects ethnicity data, but there will be nevertheless analyses drawing on the data we have from Statistics New Zealand and the data we have within IR that should be able to give us some sort of understanding of the differential impact, if any, of the changes to the tax thresholds and the changes to the independent earner tax credit and the changes to the family tax credit on Māori and Pasifika households, as opposed to other households in our economy. I think it is quite important for us to understand that. At this stage, I guess, the Minister certainly won’t have that in the Chamber, but if he could let me know whether or not that kind of distributional analysis exists—and if not, why not? I would be curious to know about this. So that’s one for the Minister.

RICARDO MENÉNDEZ MARCH (Green): Thank you, Mr Chair. I wanted to follow up with some questions on the distributional analysis of options that was presented in the regulatory impact statement. I take his point that not all of the advice has been published, but, in the interest of transparency and the commitment—in the coalition agreement that he’s got with the other parties—on using best available data and evidence—

Hon Dr Deborah Russell: I raise a point of order, Mr Chairperson. I just wanted to remind the member if he could turn to the mike, because it’s a bit hard to hear—

RICARDO MENÉNDEZ MARCH: I need to speak more closely to it. In the interests of transparency and best data and evidence, I did want to elicit some answers in relation to the advice on the distributional impact analysis options.

Grant McCallum: It was better when we couldn’t hear you.

James Meager: Too close now.

RICARDO MENÉNDEZ MARCH: It’s interesting that the members to my left—the Government members—have taken, basically, pretty shallow contributions throughout this debate and yet find time to mock their own bill.

Francisco Hernandez: Twelve-second speeches.

RICARDO MENÉNDEZ MARCH: Yeah—12-second speeches. Anyway—going back to distributional analysis of options: the analysis that’s been presented in the regulatory impact statement contains very little analysis in relationship to gender and ethnicity. There’s one paragraph that talks about “relatively fewer Māori, Pacific Peoples and women benefit from the package.” But, if he wouldn’t mind expanding, I did want to get a sense—when the advice says that “Compared to the overall population, relatively fewer Māori, Pacific Peoples and women benefit from the package.”, can he explain to us whether he actually had any concerns when that evidence was presented to him. Again, those are the questions that we would have expanded on in the select committee stage.

The advice on distributional analysis does show that people receiving main benefits, who have relatively low incomes, do not gain from the package as benefit rates are set in after-tax terms. So I did want to get a sense of whether the Minister had—because he’s just told us that there wasn’t a child impact assessment being done. I am interested—from, again, a child poverty reduction element, which is different from a child impact assessment, and the fact that on this bill, and this part of the bill around the income tax threshold changes, it’s been identified that Māori, women, and Pasifika people benefit less and that beneficiaries will benefit disproportionately less—in why he did not seek a child impact assessment, or why he hasn’t presented to us the impact that this will have on children, particularly those in poverty. I think it’s not good enough. We’re a party that has been criticised—actually, not just us; the Opposition has been criticised—for just being shallow in our slogans. I think the contributions so far have been full of slogans and very little substantiation to actually what the intent here is around lifting those in the most severe poverty.

The second question I had around the distributional analysis of options was around whether he thinks that there will be any impact on employment levels as a result of this. I think that was very briefly mentioned, but, again, if the Government’s intent is to get people off the benefit and into work, and we know that the toxic stress of survival plays a huge part in people being able to get into work, I am curious as to whether he sought any advice from the Ministry of Social Development, for example, or anyone else—those stakeholders—around impacts on employment levels as a result of beneficiaries not being as lifted through these tax relief measures. This does seem to then contradict the broader intent and the strategic goals of this Government.

To recap, I’m interested in whether he received advice on the number of Māori, Pacific people, and women who would benefit less—the specific number—and then I’m also interested in understanding the impacts of unemployment figures as the result of this bill and whether he received any advice in relation to this.

Hon SIMON WATTS (Minister of Revenue): I guess one of the outcomes of providing tax relief to low and middle income New Zealanders is that, surprisingly, when you reduce their taxes, they have more money in their back pocket. So the simple calculation in regards to the provision of tax relief to low and middle income New Zealanders, as has been delivered through this Budget and through this bill, goes right to the heart of what the member’s points and questions are. They are going to end up with more money in their back pocket than what they have under the status quo. So while the distributional impact on child poverty hasn’t specifically been undertaken, it doesn’t take one too much to do a correlation to say that if we’re putting more money into the back pockets of those two groups—which, no doubt, have a higher degree of exposure and impact in regards to the areas and challenges that the member has articulated—then they’re going to see benefit.

The other aspect that is asked is whether the Government has considered any difference in the way in which we apply tax rates based on gender or one’s ethnic background. Well, surprisingly, no. The tax cuts that we are providing are for all New Zealanders who are on low and medium income bands within the tax scheme. We’re not differentiating based on anything other than what their income is. What we’re doing, through this, is providing tax benefit and reducing the tax that those individuals pay so they have a little bit more in their back pocket to spend on the things that they need in their life. It’s quite simple.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Mr Chair. Well, we’re into the guts of it now, discussing clause 7, which amends Schedule 1 of the Income Tax Act. This is where the bulk of the heavy lifting in the Government’s taxation bill is, and it’s really useful for members around the Chamber to be able to ask questions about how the redistributive decisions that the Government has made are reflected in this clause 7.

So I need to ask the Minister of Revenue some of the questions about the values that have gone into this bill, and I want to contrast his bill with the Taxation (Budget Measures: Family Incomes Package) Bill from 2017. That was a comparable bill to this one because it was attempting to do similar things, but it was from a previous National Government that was at pains to talk about the values and the trade-offs in policy that were being made in similar legislation in that bill.

If you turn, say, to the description in that bill’s explanatory note of a similar section, it says, “The tax and transfer system is redistributive and is designed to provide assistance to those in financial hardship.”, and that speaks to the values of the legislators who were making those decisions in 2017. Not one time in this bill are those kinds of values outlined, and so my first question to the Minister is, given the rates that he has set out in Schedule 1, which is amended by clause 7, does he still believe that the tax and transfer system should be redistributive and designed to provide assistance to those in financial hardship, and are the rates that he has set designed to provide assistance to those in financial hardship? A further question is: why, then, if that was a principle that the 2017 National Government signed up to, did this Government repeal the Tax Principles Reporting Act?

Hon DAMIEN O’CONNOR (Labour): Point of order, Mr Chairperson. Look, I’ve only been in the Chamber a short time, I know, but I’m speaking on behalf of my colleague the Hon David Parker because I know he’s down there. He’s at a slight disadvantage because he is disabled at the moment with a leg injury. I know he’s a little slow to get up, and I’m just concerned that he may miss his call because he’s too slow to get up. So that’s just a point for you to note, Mr Chairman.

CHAIRPERSON (Teanau Tuiono): Thank you, the Hon Damien O’Connor. I will keep an eye on him.

CAMILLA BELICH (Labour): Thank you, Mr Chair. And, yes, very good point of order. It’s important to note that it’s important we all get to have a say in this debate, because we don’t have a select committee process for this, and so some of the things that we might have been able to kind of tease out through select committee, we are having to raise with the Minister through the stage of the committee of the whole House.

So my contribution is not going to be a long contribution. I have a few technical questions for the Minister in relation to the definitions in Part 1. So the first question I have for the Minister is in Part 1 is on the definition of children, which is relevant to the calculation of the relevant tax credit that people are entitled to and starts in clause 5 of the bill but inserts new section MF 4J as an amendment to the existing legislation. It defines children in the new section MF 4J(3)(c)(ii) “the number of children for whom the person is allowed the in-work tax credit:”.

Now, I myself was not a tax lawyer. I understand that sometimes unusual language is used in tax bills. But I think, for the elucidation of the committee of the whole House, it would be helpful to know from the Minister whether he considered a change in relation to the definition of this formula, because children is written there twice. So it’s a definition of children, and then the explanation for the definition also includes the word “children”, which is quite unusual. That’s not the only place that that’s mentioned within this part. That is also separately defined in another part of the bill when that definition is included again in new section MF 4K(3)(c)(ii). So I just wanted to ask the Minister, in fact, if he could explain in plain English the effect of that definition, and if, in fact, it is possible to use clearer language to look at the effect of that particular definition. Because as a lawyer but not a tax lawyer, I admit, it might be easy for tax lawyers to understand, but it’s relatively confusing for me.

So that was my first question. The second question I have is another definitional related question.

Grant McCallum: I thought you were being short.

CAMILLA BELICH: Well, I’ve still got half my call to go. The more questions you ask me, the longer I’ll take. So happy to have contributions from my colleagues on the other side of the Chamber. Any other questions—happy to answer.

The next question I did have for the Minister was in relation to new section MF 4J(3)(d)(ii), which is the first instance that I could see in Part 1 when the term “spouse, civil union partner, or de facto partner” was used. Now, there isn’t a definition section in this bill. It would have been in Part 1 if there was a definition section, I understand—that’s the usual way of legal drafting. But that is also used in that part as well—new section MF 4J(5)(b)(ii). It’s also used in MF 4K(3)(c)(ii). It’s also used in that same section in (d)(i) and (d)(ii) and, in fact, in that same section but in new subsection (5)(ii) and (5)(iii). So it’s not defined in the Act.

I wanted to know from the Minister: is it the definition that applies to “spouse, civil union partner, or de facto partner” in the primary Act—the Income Tax Act—or is it the definition used in the Property (Relationships) Act, or in fact is there another definition which is applicable to this piece of legislation? The Minister may think that that’s a minor thing, but obviously when it comes to tax, exact entitlements for the people who will get the particular tax cuts are key. Having that fine detail is essential.

Hon SIMON WATTS (Minister of Revenue): Thank you, Mr Chair. I’m very happy to provide some context for the definition of child. Children in this context—and it is not a separate definition. It is a definition that’s already included within the overarching legislation. But just for the member’s interest and general detail, it includes those that are 15 years of age or younger; or someone who’s 16 or 17 years of age and financially dependent on the caregiver; or 18 years of age, financially dependent on the caregiver, and still at secondary school or at a tertiary education. They can’t be married, in a civil union, or a de facto relationship. There are also some different sub-definitions around foster care and other considerations. So we’re not talking about anything new in regards to children. It is a consistent definition.

Hon DAVID PARKER (Labour): Can I thank my colleague Damien O’Connor for the assistance to get this call. I didn’t need it.

Hon Dr Megan Woods: He’s always kind.

Hon DAVID PARKER: He’s always—that’s right. He’s always got my best intentions at heart.

I would like to ask the Minister whether he’s comfortable with the effect of this on Government debt. These provisions are one of the biggest contributions to the deficit, as a consequence of the Budget, and my understanding—and the Minister can tell me if I’ve got this wrong, but in order to drill down on what the effects are on gross and net debt and the operating balance before gains and losses (OBEGAL) deficit, we have to turn to the Budget documents. I just want to check that my understanding of the effect on this on debt over time is significant and that the effect of this on the OBEGAL deficit is also significant.

I want to draw the Minister’s attention to page 156 of the Budget Economic and Fiscal Update 2024, which shows that Government debt, or gross debt, in 2019, which was just before, of course, the COVID epidemic hit us, was $84 billion. It rose steeply through that period so that now it has increased to $174 billion. That has been of considerable concern to the National Party, according to the statements I heard both at the election and since then, and, yet, if I’m reading the Budget forecasts correctly, from now on, gross debt increases from $174,593,000 forecast for the end of this Budget year 2024, increasing to $243 billion in 2028. So am I correct that according to his own Budget documents, including the effect of these tax cuts, gross Government debt increases from $174 billion to $243 billion in 2026? That is my first question.

Hon JULIE ANNE GENTER (Green—Rongotai): Tēnā koe, Mr Chair. Thank you very much. I’ve been waiting for a while to try and ask my questions. But I wanted to dig into, again, the regulatory impact statement on the distributional analysis of the options. It’s just because we haven’t had a select committee process for this bill and we only received these documents a short time ago. So I’ve just been trying to understand.

It seems to me that in the analysis of the options—and there were six options analysed—that option two is the option implemented by the bill. But, I guess, I’d like to ask the Minister that. Like, is option two the one that is implemented by the bill, or is it different to option two? There’s more information given about the distributional impacts of option two and a very helpful figure one, which I think is really useful because it shows what the impact is on household incomes by equivalised income quintile. What it does show is that—if it is option two, and there isn’t a comparable figure for the other options—the lower-income households get less money from these tax changes per week than the highest-income households, and significantly less.

So, when the Minister and the Government say that these tax changes are aimed at low and middle income earners, I just wonder how that squares with this distributional impact analysis, if indeed option two is the one being implemented. I would note—and I know my colleague brought this up as well but I think, because the Minister spoke to it, I would just go a bit further—it does say, “Compared to the overall population, relatively fewer Māori, Pacific peoples, and women benefit from the package.” I think that analysis is really important. While the Minister and the Government want to say, “Our tax settings just have to do with income, nothing to do with your demographic background.”, the whole point of this analysis is to point out that the current society and structure that we live in right now isn’t fair and it’s disadvantaging certain people.

The point of the distributional analysis and the analysis on how it’s going to impact Māori, Pasifika people, and women is relevant because what it’s saying is, “Well, they’re going to benefit less than other people.” That’s kind of important; if we want a fairer society, how are we going to address that when we continue making changes that entrench the existing inequality that exists because of centuries of racism and patriarchy and colonisation? Like, let’s just own that history and say that the point is, if you want a level playing field and an equal society, you have to make some changes to how things are done, otherwise you just entrench the existing inequality. I’m very interested in the Minister’s answers about the distributional impact analysis of options and which option actually is the one implemented in Part 1 of the bill, clause 7(1).

Hon DAVID PARKER (Labour): Thank you, Mr Chairman. I note that the Minister hasn’t responded to my questions on debt. I would reinforce the point by noting that gross Government debt, which he criticises from the last Government, increased over a six-year period from $88 billion to $174 billion, including the enormous cost of COVID, which was the major contributor to that. Yet from here forward, we go up from $174 billion to $243 billion, an increase of—what’s that? That’s about $70 billion extra in debt.

It seems to me that that is reinforced lower down on the same table on fiscal indicators when that is expressed as a percentage of GDP, and, indeed, gross Government debt, which is currently at 42 percent of GDP, continues going up for the next years to peak at 49.9 percent of GDP. How can that be prudent, given the criticisms that that Minister and other members of the Government have made of the prior Government in respect of that debt track? I would like to hear from the Minister on that point.

Hon Dr DEBORAH RUSSELL (Labour): Thank you, Mr Chair. I’m actually really concerned about something now. I want to track back to the concerns around payroll providers, and the Minister gave us a fairly firm assurance that officials had consulted with payroll providers and they were pretty confident about this 31 July start date. I want to draw the Minister’s attention and the committee’s attention to paragraphs 38, 39, and 40 of the regulatory impact statement.

So 38 goes through the fact that Inland Revenue (IR) is going to be responsible for the ongoing operation and enforcement of the tax system—pretty standard stuff—when Inland Revenue can get changes made in their system so that the whole new changes to tax thresholds can get into place. But then in 39, it was talking about the process; it was saying that Inland Revenue would need to contact significant groups such as payroll providers, software providers as soon as possible after the changes are announced to help ensure there are no delays.

Now, that’s interesting because I understood that Inland Revenue had consulted with payroll providers, but now paragraph 39 is saying that Inland Revenue will need to contact significant groups such as payroll providers as soon as possible after the changes are announced. So that’s kind of a little bit of an anomaly there.

Now, there’s probably a perfectly good explanation, but I would like to have it as to why on the one hand, this committee was certainly given the impression that payroll providers had been consulted, but now, in paragraph 39 of the regulatory impact statement, we have this this line saying that IR will need to contact significant groups “as soon as possible after the changes are announced”. Those changes were only announced today. So a little bit of—just to clarify that would be really helpful.

It goes on to say that IR needs to have a communications plan in place. So now, having worked with the excellent officials at IR, I know that that will all be happening. But here’s the bit that’s actually really a bit worrying, OK? It’s paragraph 40 and I’m going to read it out because I think this needs to be in the Hansard after the assurances that have been given to us by the Minister.

In paragraph 40, it says: “If the changes come into effect on 31 July 2024 and are only announced on 30 May 2024 it is likely that some employers will not be able to make the changes in time and will incorrectly calculate the income tax to be deducted from their employees pay.” Just a note for the IR officials: there’s an apostrophe missing there. Sorry—but carrying on. Now, I just want to repeat that. It says, “it is likely that some employers will not be able to make the changes in time”. But we were given assurances that they would, so that really is a bit worrying.

Now, IR officials go on to say—and this is quite correct; it says in the later part of this paragraph that “This can be corrected in later pay runs by the employer or can be corrected as part of the end of year tax assessment process that Inland Revenue runs.” So it can all be squared up.

The point is that ordinary New Zealanders—the people who are worried about a cost of living crisis, the people who want to make sure they’ve got more money—have been told that these tax threshold changes are going to take place in effect from 31 July. They will be expecting that their pay packets will change in the first pay period coming in after 31 July. That’s the reason we’re here today.

It’s the expectation that has been given to them by the Minister of Finance, by the Minister of Revenue, by the Prime Minister, by the entire approach to this Budget that they will get the effect of those tax threshold changes—will throw flow through to their pay packets from 31 July. So they’re expecting they’re going to get paid; their first payroll rolls through, say, on about 7 August. They would expect to see some change in their pay packet. But here, in the regulatory impact statement, despite the assurances that have been given to us, we now find out that it is likely that some employers will not be able to make the change in time. This just doesn’t stack up with what was being said earlier.

Hon Member: Well, they’ll back pay it.

Hon Dr DEBORAH RUSSELL: I know—I know it could all be corrected later on. It can be squared up in the end-of-year tax return or it can be squared up in later pay periods. But even if that doesn’t flow through correctly, what else is not going to be done correctly? What’s going to be the impact on the independent earner tax credit? What’s the impact on the family tax credit? What’s the impact on all the other stuff that has been promised in this Budget? I think the Minister needs to clear this up.

Hon SIMON WATTS (Minister of Revenue): Thank you, Mr Chair—sorry, Dr Lawrence, but I thought I’d better answer this question, because the member was raising it at such a significant potential opportunity or issue. I just draw the member’s attention to the date in the regulatory impact statement, which was finalised, which is 24 April 2024. Today is 30 May. In that six-week period, subsequent work was undertaken in regards to consultation with payroll providers, which provided the degree of confidence that I’ve articulated today.

So, while it was noted there that that was the effective date, and six weeks is quite a long period of time, we appreciate the reality of how Budgets work, and that’s why there is point of difference. So there is nothing sinister as the member is trying to imply. It is simply a timing difference in regards to that, and, hopefully, that clarifies that point in particular.

In regards to the questions from the Hon David Parker around the gross debt considerations, those are probably best suited to the Minister of Finance. However, I do acknowledge that we are under urgency, and we’re just going to have a little bit more time before I provide a comprehensive response to that member’s question.

Dr LAWRENCE XU-NAN (Green): Thank you, Mr Chair. In terms of what we have heard so far, I think one of the areas that needs further clarification from the Minister—thank you for turning the mike on—is around the support for seniors and the support for those who are on superannuation, and also for our retirees.

The first thing I would like to address is what people have previously mentioned in terms of the impact statement and particularly around the distribution analysis of options. When we are looking at overall relatively fewer people benefiting—these are people who benefit from it; like, these are people who don’t even get anything out of this, let alone people who only get a very low amount from here. I agree with and appreciate what the Minister has said in terms of that the whole point of this is so that low and middle income New Zealanders have more money in their back pocket. But let’s look at the numbers here in this case.

According to what is both in the impact statement and distribution impact analysis of options, as well as what is laid out in clause 7(1) of the bill, for someone who is on New Zealand superannuation, you get $800 a week together as a couple. That is $41,600. Now, although this says—the distribution option, it says “By contrast, almost all seniors benefit from the change due to the near-universal receipt of New Zealand super, but by a small amount $13 per week.” However, going by the official calculator—this is the official Budget calculator—for a couple who are retirees with no additional income, they get $4.30 a week. That’s $2.15 per person, not what is stated here in terms of by a small amount in the statement of $13 a week.

So, if you extrapolate that into how much people are getting—if you are looking at elders who are currently renting, who do not have their own home—and, again, this comes down to what’s the modelling the Minister has done and the people have done in terms of this bill and looking at this. I appreciate what you are trying to do here, but if you look at the average rent cost of $624 a week—this is the average rent cost for Tāmaki-makau-rau Auckland, minus everything else we’re getting—we’re looking at a couple getting only $88 left per person per week, with a tax break that you are saving here of $2.15.

In terms of this, I would like to know from the Minister, in the modelling you have done in readjusting the tax bracket, what modelling has been done on these people, on people who are elderly who are renting, who do not have additional sources of income other than their superannuation, and what tax relief they will be receiving.

Hon SIMON WATTS (Minister of Revenue): Just in regards to the member’s question, I’ll reference the fact sheet that is provided alongside the Budget material. There is a worked example there in regards to a retired couple, and there’s a footnote that sits below that calculation that actually provides exactly the rationale and the background in terms of how those numbers that the member has just articulated is calculated. It is reflective of the different rates per year, based on those impacts.

There was another question earlier on in regards to the options within the distributional impact. The clarification is that option two is the scenario that is included within the bill, just for that member.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Mr Chair. Acknowledging that there are a number of questions that are still outstanding for my colleague the Hon Dr Deborah Russell—and I am interested in those, but in the nature of what is, you know, a brief committee stage, I will introduce a new line of questioning about the considerations that went alongside the adjustments that are being made to Schedule 1 in clause 7. So, if you follow along with me, the rationale that the Government is using in all of the accompanying material to these changing thresholds is that despite growing incomes, the tax thresholds have not changed and so that’s what’s required, but also alongside those growing incomes, some families are still seeing rising costs placing pressure on their living standards, and particularly housing. In today’s Budget documents released by Treasury, we saw that there’s a marked increase in housing costs for most families, and rents in particular are forecast to continue to rise in this forecast period.

So my question is: last time the Government considered these changes in its 2017 bill, the changes were done alongside an increase to the accommodation supplement. The rationale for that was that rising housing costs have increased the proportion of income spent on housing. So when you make the kind of threshold adjustments that are being made in this bill tonight by the Minister, there’s still this unfair burden on low-income families who are paying more of their income on housing. So the Government in 2017 said that as a result of that, low-income families had been seeing a decline in their residual and after-housing-costs income, and so they implemented changes to the accommodation supplement to deal with that example.

I want to just explain this; it’ll just take me a minute. Recipients of the accommodation supplement who receive a main benefit have seen their residual incomes fall in real terms, and so the recipients of the accommodation supplement who don’t receive a main benefit or New Zealand superannuation have also seen residual incomes fall—their after-housing costs. That’s not necessarily helped by the changes that are in Schedule 1, proposed by clause 7. So my question to the Minister in the chair, Simon Watts, is: has he considered, alongside the changes that he’s proposing in Schedule 1, an increase to the accommodation supplement that would acknowledge those changes?

I’d like to come back to this, because I’m sure the Minister can explain for us the trade-offs that he’s made in not providing for an accommodation supplement increase, but I’d be really interested to tease out with him what other measures are appropriate given that he made that trade-off, and what the Government will be doing in the face of Treasury’s findings today that were published that rents will be continuing to rise markedly in the forecast period.

Hon SIMON WATTS (Minister of Revenue): Just in response to the member’s question in regards to the accommodation supplement, I think—well, the member’s actually answered it in part, in the way in which she acknowledged that there are a number of trade-offs that are made in regards to these decisions. We haven’t made any adjustment in regards to the accommodation supplement. We’ve targeted our tax relief in the areas that we’ve outlined in this bill, and that is an area that we haven’t looked to adjust at this point. The reality is that there is a wide range of considerations around that, but in regards to what we’ve delivered, it’s consistent with our coalition Government’s priorities and those included within our coalition agreements.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Mr Chair. In the nature of engaging in questions with the Minister—and I thank him for his answer—was the trade-off to provide a tax cut of $2.9 billion for landlords the trade-off that he’s talking about when he didn’t consider an accommodation supplement for some of the most vulnerable New Zealanders who cannot access housing because of those decisions?

Hon JULIE ANNE GENTER (Green—Rongotai): Thank you, Mr Chair, and I thank the Minister for his answer earlier. So I’ll just restate the other question which he has not yet addressed, which is—

James Meager: Oh, repetition.

Hon JULIE ANNE GENTER: Well, the Minister hasn’t yet addressed the question, so I think it’s fine to restate it, since he hasn’t addressed it. How can the Minister continue to claim that these tax changes are geared towards low and middle income New Zealanders or the squeezed middle, when the distributional analysis in the regulatory impact statement makes it very clear that the largest gains go to the highest income households, and it’s substantially more than the lowest income, but even the second to lowest quintile.

So, for the benefit of the members opposite, who I know sometimes find me very intimidating, I’ll be very careful here in how I present my information: there’s a document that members opposite can get from the Table there. I know they’re new. It’s called regulatory impact statement, personal income tax relief. On page 21 of the regulatory impact statement, which is annexed to distributional analysis of options, this means looking at the different options that they’ve considered and saying how they impact different people in society.

When the Government makes claims about these tax changes benefiting the squeezed middle, that is a claim about a certain group in society. If you break down households by their household income into quintiles, which means divided by five, then there’s the lowest fifth, the next lowest fifth, the middle fifth, and the top two-fifths. It says very clearly—and I’ll just read this for the members, because they can’t read it when I hold it up—that the largest weekly gain goes to the fifth quintile. That’s the highest fifth of income earners, reflecting the fact that the maximum gain from the personal income tax threshold adjustments occurs at a relatively high individual income level. So what this means is higher income households benefit more, relative to median income households.

So my question for the Minister is: how can he keep saying this, when clearly the impact of the tax changes in clause 7(1) is to give more cash back to those on the highest incomes, who really probably need it the least? Of course, these are just the personal income tax changes. I don’t believe this analysis—and maybe the Minister could answer this question: does this analysis include the changes to interest deductibility and basically the benefits to landlords?

Hon SIMON WATTS (Minister of Revenue): Thanks to the member for the questions. I’ll reiterate that the reductions in personal income tax rates are on the three lowest income bands—the three lowest. So by virtue of targeting that aspect of low-income New Zealanders, those are the individuals that will get that benefit.

The member is referencing some of the distributional impact analysis around that. In addition to those changes in the bottom three income brackets, we’re also making some changes in regards to Working for Families and the eligibility banding within that as well. That, specifically, again, will target low to middle income New Zealanders. So I think the member can have a degree of assurance that what we are doing is targeting that area, and the nature in which we’re achieving that is both through the personal income tax threshold changes—again, targeted at the lowest and middle income New Zealanders—and broadening the eligibility criteria and thresholds from the other aspects of the taxation initiatives that do benefit those groups as well. In combination with that, we are doing significantly more for that population group than the status quo. By voting against this, you’re, in effect, supporting the status quo.

Hon DAMIEN O’CONNOR (Labour): Thank you very much, Mr Chair. I’m going to take a brave approach to this and take a generous approach to this piece of legislation, because it says here the bill also intends to reduce the cost of living. The Government’s adherence to tax—and, of course, their claim that, you know, high taxes, the lack of changes to the thresholds, have been the biggest impact on the cost of living for New Zealanders. Then the question for the Minister is: did he or the Government consider different changes to the thresholds and the impact that that might have had on the cost of living—not the tax going back, but the cost of living? Because the reality was for people in those different thresholds, the cost of living is made up of different things. Tax is one part of that.

In fact, if you go to the top end over $180,000, in fact the cost of living is made up of food and rent—often not rent because they probably have their own homes. In fact, it’s discretionary income that will be given back to those higher-income earners. As the previous speaker said, at the top quintile, where most of the money will be going, the impact on cost of living is minimal. It will be an impact on discretionary spending, but not cost of living. So if we could go back in a generous way—and I know that I’ll be criticised by my colleagues—and say, actually, the Government may be genuinely interested in reducing the cost of living instead of what some people have been saying, which is “Actually, they’re just interested in handing benefits to landlords.” I’ll be generous. I’ll say they are genuinely interested in reducing the cost of living and so the changes to the thresholds in clause 7 here have been made by the Government.

My question to the Minister is: did he or his colleagues think about other adjustments that may have, at the bottom end, say, $14,000 to $15,000, $15,000 to $48,000, whether you’d extended that out to $60,000, and whether, actually, more benefits to those people whose cost of living is really significant—they spend, virtually, every bit of their income surviving.

Grant McCallum: That’s why we need tax relief.

Hon DAMIEN O’CONNOR: Oh, well, that’s one of the things, yes. I accept that the money going back to them will help, but if the aim is to genuinely reduce the cost of living, there are many other charges that are going to come at New Zealanders through this Budget, believe me—many that haven’t been identified yet. So the question is: will this deliver to those in the $15,601 to $48,000 bracket, who’ll be paying 17.5c per dollar? Will the relief they get from the changes to the threshold have any real impact on the cost of living for those families? Has the Minister considered it, and whether there were other ways of reducing the cost of living, better ways, than the changes that have been made here?

Because I can tell you that from $180,000 upwards, for most of the people here—all the people in this House earning over $180,000—this won’t make much of a difference to our cost of living. It won’t make much difference to our cost of living because it will be discretionary spending. So the question to the Minister: were there considerations given to other changes in the thresholds or other groupings that may have genuinely reduced the cost of living for those people who really need to have their cost of living reduced? If it’s the aim of the Act, or the aim of the bill, as we’re told, then I want to know from the Minister that these decisions are going to deliver the best outcomes as claimed by the Government.

Hon SIMON WATTS (Minister of Revenue): I thank the member for the question. I also acknowledge his agility on the rugby field in the Parliamentary Rugby Team, as well.

Look, we’re talking about a tax bill here, and some of the questions that were being noted there are broader in regards to the economic implications. The reality of reducing income tax on individuals is going to mean that they’re going to have more of their own money to be able to spend or save in the way in which they determine, and on this side of the House, we are supportive of people taking personal responsibility about how they spend or save that money. No doubt, some of that money that they will not be paying in tax to the Government will be used to pay for goods and services that they may not have been able to afford previously if they had not had that money, and, therefore, their ability to deal with the implications of the cost of living will be softened as a result of that.

The broader conversations around scenarios and optionality are included within the documentation in relation to this bill. There was consideration, as you’d expect, in terms of the coalition Government in regards to policies, but we have landed where we have landed, and we deem that that is the most appropriate mechanism in order to deliver that tax relief to low and middle income New Zealanders.

In regards to the questions from the member in regards to the debt track, the view is that the general questions of that nature are more appropriately directed to the Minister of Finance, and from my assessment of them, they’re outside of the scope of this bill.

GRANT McCALLUM (National—Northland): I move, That debate on this question now close.

RICARDO MENÉNDEZ MARCH (Green): Thank you very much, Mr Chair. I wanted, subsequent to questions followed from the good interrogation from my colleague Julie Anne Genter, to pick up on the first quintile in the average change in income analysis in figure 1 in the regulatory impact statement. So the first quintile, what is shows is, picking up on where my colleague had left around how—despite the comments from members opposite to me that everyone will benefit, the first quintile actually shows that not actually everyone will benefit. I just wanted to test whether the Minister could clarify whether it is factually correct to say whether everyone will benefit when the analysis in that first quintile actually shows that there’s about 8,000 households who will not be better off. It may seem like a small proportion of people, but as we have traversed in other discussions around benefit increases, actually, average numbers don’t paint a full picture.

The first quintile did show that the group of people who would be not better off are people who would have been on the benefit during some period. What I think that shows, and I want the Minister to help us elaborate, is that this bill does not equally lift all boats; that, in fact, the people most benefiting from this bill are those that are well off. So following the specific questions I had was (a) whether he thought it’s factually correct to claim that this bill benefits every single person in this country, and, if so, why?

The second question I had around that first income quintile—also known as those who have the lowest incomes; for example, people on the benefit will be disproportionately represented in here—was whether he sought or he received a breakdown, particularly for this first quintile on age. I’m asking because a lot of young people are on lower incomes and ultimately we haven’t really discussed the impact of the distribution and how this bill will be distributed amongst and will impact young people. So I do want to get a sense of whether he sought or had a breakdown by age around those quintiles—how young people are represented in that first quintile in that analysis.

I did want to go back to a question that wasn’t quite addressed earlier in the night around whether there was any engagement with Whaikaha in relationship to the impact on how those tax breaks would be distributed amongst disabled people. I asked this because multiple research has showed that disabled people are overrepresented in those lower incomes. When we just get a breakdown of the number of households but we don’t really get a picture painted around how many of those households that are not proportionately benefiting from this bill—how many of them are young people, how many of them are disabled—I think then the Minister isn’t actually painting a clear enough picture to the House and to the public around, for example, where will disabled people be and how they will benefit in relationship to this bill. Because we’ve talked about plenty of the people in work, but there are many disabled people who are out of work, many of them who receive a benefit. The distributional analysis talks about how beneficiaries will not be as benefited because of this, but he hasn’t addressed how disabled people will feature in here. Disabled people make up a quite substantive proportion of the population.

We already heard from the Minister that there was no child impact assessment being done, and I’m starting to get concerned that there was not robust enough work going into the impact on different population groups as a result of these tax cuts, which are one of the key features in this Budget. So I do hope the Minister can give us precise answers in relationship to whether it’s factually correct to say that everyone will benefit, (b) the analysis around disabled people, and (c) the analysis on the breakdown of young people. Well, that’s not everyone, and the member earlier was talking about how everyone would benefit, right? That is actually quite important to actually claim. It’s important for the Minister to be clear that some people will be worse off as a result of these changes: a small group, but none the less some people will be. Who are these households? They’re people on the benefit—the ones doing it the toughest. We haven’t been able to be upfront with this committee about the fact that those who will benefit the least from these tax cuts are the people who are already struggling to make ends meet.

CHAIRPERSON (Teanau Tuiono): Members, the time has come for me to leave the Chair. The committee will resume at 9 a.m. tomorrow.

Debate interrupted.

Sitting suspended from 10.03 p.m. to 9 a.m. (Friday)

THURSDAY, 30 MAY 2024

(continued on Friday, 31 May 2024)

Bills

Taxation (Budget Measures) Bill

In Committee

Debate resumed.

Part 1 Income Tax Act 2007 amendments commencing 1 April 2024 (continued)

CHAIRPERSON (Barbara Kuriger): Good morning, members. Members, when the committee rose last evening, we were considering the Taxation (Budget Measures) Bill, and we were debating Part 1. Part 1 is the debate on clauses 3 to 7, “Income Tax Act 2007 amendments commencing 1 April 2024”. The question is, again, that Part 1 stand part.

Just before I give the call, I have a list and I’ve had a discussion with the presiding officer who was in here last night of the things that have been discussed. So, on Part 1, we’re looking for new information or any Amendment Papers that have not yet had an opportunity to be discussed—so new things, please. At that, I’ll say the question is, again, that Part 1 stand part.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Madam Chair, and good morning to you, Madam Chair, and good morning to the Minister of Revenue. I thank him for his lively engagement last night in what has been an interesting and useful debate, given that we haven’t had a chance for the select committee stage on this bill.

I have a number of questions about the redistributive effect of clause 7, that’s Schedule 1, that is still on the Table for us to canvass a bit more today. Before the House adjourned, we were discussing some of my questions, which were still outstanding, about the redistributive effect of those numbers outlined in Schedule 1, given that there are fixed costs which are still rising for some families in the lower three brackets on that table, particularly around accommodation, because we saw yesterday that Treasury has predicted rising rents.

So my question to the Minister was about the trade-offs that he spoke about when he answered my questions, when he considered the accommodation supplement going up alongside this redistribution that he’s set out in Schedule 1. The reason I’m asking him this is because we want to make sure that the tax and transfer system is redistributive and is designed to provide assistance to those in financial hardship. That was something that’s not only been canvassed in similar bills introduced in this House by Labour Governments but was also introduced in the 2017 bill which set out to do exactly the same kind of change that the Minister has proposed in Schedule 1.

So what I want to hear from the Minister on is those questions which I asked him last night, which he did not address, about the values which he has used to determine the redistributive effect of those bottom three brackets alongside rising costs for people on the lowest incomes. What I really want to get to here with the Minister is whether he’s considered the tax benefits that he says will accrue for those lower three brackets, whether those will be eroded, particularly by housing costs. Because, Madam Chair, if you’ll let me explain this point, rising housing costs have increased the proportion of income spent on housing, particularly for low-income families. As a result, some low-income families have seen debt, declines in residual—that’s after-housing costs, in their real incomes and in their spending.

So the impact that I want to discuss with the Minister is what he said last night when he said that we have considered increasing the accommodation supplement alongside these changes but we decided not to do that because of the trade-offs involved. I’d like him to talk us through what those trade-offs were, particularly in the area of housing costs, because recipients of the accommodation supplement who receive a main benefit have seen their residual incomes fall in real terms on average across the period that we’re talking about here, but the Minister’s choices in those three brackets in Schedule 1 don’t address that aspect of it. Also, people who receive superannuation and don’t receive a main benefit have seen their residual incomes fall in real terms on average. So that’s the point I want to get to here with understanding that.

My second question for the Minister in the time remaining that I have is about whether these changes represented in Schedule 1 represent a move that is simple in our tax system, which is, it’s a tax and transfer model that he is using which is often complex, and the rules determining eligibility and claiming entitlements can be difficult to navigate in other parts of the section. But I want him to explain why this measure is preferred that he’s outlined in Schedule 1 when other mechanisms that he is using to, essentially, give rebates in the rest of the tax bill don’t meet with those objectives of simplifying the system to clearly link what he, I think, would see as linking hard work with reward. While we don’t agree with that, it is a principle of the tax system that is important and is internationally recognised, and I’d like him to give us some sense of whether this is a simple and effective way to redistribute wealth.

Hon Dr MEGAN WOODS (Labour—Wigram): Thank you, Madam Chair. One of the things that I’m just wondering whether the Minister in the chair, the Hon Simon Watts, has had a chance overnight to get some advice from officials on was a question I asked last evening that hasn’t been answered, around what the net cost of the tax cuts will be, given that there are a number of Government payments that are based on after-tax income, and given that there will be a rise across various brackets, as laid out in clause 7 of the bill, that this will affect eligibility and there will be a netting out of some of the cost.

But my other question for the Minister—and we have spoken a little bit about the distributional impacts, and I think, given we’re not having a select committee stage of this bill, those distributional aspects are something that is our job in this part of the bill, where we are discussing what the thresholds are, to explore how this is impacting various groups in our communities. One of the specific questions I have for the Minister is drawing his attention to the regulatory impact statement where it talks about the 8,000 households who will be worse off under this package, that they will actually receive less income per week. They’re all in the lowest quartile, so they are all our most vulnerable households, that will indeed be worse off under this package. The reason that is given in the regulatory impact statement for this is these are typically families that move in and out of benefit eligibility throughout the year.

Now, any of us who do constituency work know that that moving out of benefit eligibility not only will have an impact on tax thresholds but also can mean a great deal of financial complexity for families around things like income-related rent subsidies and what is owing there. So this is actually putting this impact on some of the families who are struggling the most in the areas I represent, and I would be remiss for the people of Wigram if I didn’t get some full answers from the Minister at this committee stage around what that means for these 8,000.

In particular, I’d like to know from the Minister what alternative policies were considered—if alternative policies were considered—so that we didn’t leave these 8,000 people who are going to be worse off under this tax package, and if the Minister didn’t consider alternative policies so that we didn’t leave these families worse off, why that was not considered, why that would not be a priority for some of our most vulnerable families in our communities, that we would make them, in fact, worse off.

What we’re already seeing, and the regulatory impact statement pertaining to that schedule laid out in clause 7 already lays bare—something that I think we’ll always know when we seek to use the tax system to do redistribution—is that it is those in the lowest quartiles who will receive the least amount of benefit, that we’re seeing those on the lowest income, and the regulatory impact statement does a good job of spelling this out, receiving, on average, $13 a week in benefit. I think we can see that that is not going to deliver the relief that I think many people were hoping for, particularly when they went through an election campaign when they were told they were going to receive $250 a fortnight in tax relief. That $13 will be somewhat of a shock, but more of a shock will be for those families that find that they are worse off under this package. Now, as constituent MPs, we’re all going to have to go back to our electorates and explain to those people why it is they have less income as a result of the threshold changes that are being passed in this House today.

So just to recap for the Minister: what alternative policies were considered to ensure that people were not worse off as a result of these threshold changes, and, if alternative policies were not considered, why his Government did not see that that was a priority to ensure that some of our most struggling families in our communities would not end up worse off as a result? It is not insignificant. According to the regulatory impact statement, there are 8,000 families who are going to be in this situation, and I think that each and every one of us, at some point, will be called on to explain to those families.

Dr LAWRENCE XU-NAN (Green): Thank you, Madam Chair. First of all, I would like to echo what our colleagues have just said, that a lot of these would have been teased out during the select committee stage, but, alas, here we are, trying to tease out some of the details around the regulatory impact statement. I have two questions for the Minister of Revenue on this. The first question was a question from our colleague Ricardo Menéndez March, which was left hanging at the end of last night, around the 8,000 households—this is part of the distributional analysis of options. In there, it was stated that there are 8,000 household who, according to this, would literally be in the red as part of this assessment. What the Minister didn’t have the opportunity to respond to last night before the committee rose was a breakdown of who these 8,000 households are and what support has been given for these who—

CHAIRPERSON (Barbara Kuriger): Can I just ask the member—because we’ve just had a fairly extensive question around that, and we’re trying to stick to new material, if possible. Thank you.

Dr LAWRENCE XU-NAN: Sure; of course. Thank you, Madam Chair. So my second question follows on, again, from the question yesterday around seniors, but this time I would like to kind of draw the attention around clause 7(1) when it comes to the amendment, this time around students, and particularly for students who are on student allowance.

Now, we know that, for students who are on student allowance, they’re also not getting anything out of this. So I would like to know from the Minister what sort of modelling and impact assessment has been done for students, particularly those who are on student allowance. This is in relation to those who are currently—and, particularly for us—constituents of Auckland Central and also of Wellington Central, from Tamatha Paul’s and also Chlöe Swarbrick’s electorates. I think, in this case, it will be really vital for the Minister to provide some clarification around the support that students will be seeing as a result of this tax balance.

On top of that, it would be good to know what other approaches the Minister will consider, or the Cabinet has considered, around the support for those on the lowest salary level, and particularly in instable and infrequent salary—for example, like what I just mentioned, those who are not getting consistent salary and consistent wages throughout the year. So it would be really good to get some clarification from the Minister on this.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. I appreciate the opportunity. Just in response to the questions around distributional impact from the Hon Megan Woods and also from the member Dr Lawrence Xu-Nan in regards to the number of households that have been impacted potentially that will not benefit, the regulatory impact statement does include a number around 8,000. Subsequent to that, our analysis indicates that number is probably less than 5,000. The average impact on those households primarily is those that are part-year beneficiaries. So to be clear: no one on the benefit will receive less of their benefit as a result of what’s happened. There’s going to be no change in that. Where the implication occurs is where people are on part-year benefits and part-year working. There are 5,000 in that group; about 0.3 percent of taxpayers. As I say, $1 is the average impact, going up to a maximum of $2. So, you know, while that is not zero, it is small in regards to the consequences there.

The other questions in regards to more broader distributional impact, I have answered already last night.

The implications around the tax cuts and the focusing on Arena Williams’ question in regards to targeting—we are deliberately targeting the lower three thresholds to make sure that the impact hits low and middle income households; those are the households that are being significantly impacted by the impacts of inflation.

In terms of the redistribution impacts, quite clearly we are deliberately targeting that group because those are the ones who will be impacted.

Hon DAVID PARKER (Labour): Thank you, Madam Chair. Yesterday, in the evening—or today, in terms of our urgency clock—I asked the Minister of Revenue about what part these tax reductions in this bill play in the increase in Government debt from $174 billion to $243 billion in the forecast period. The Minister said that was a question that should be put to the Minister of Finance, under the Budget, rather than be answered by him in respect of his contributions on this bill. I don’t think that is a sufficient answer, with respect, because it is this bill that has the major tax reductions, outside of the tax breaks for landlords, that do cost a significant amount in fiscal terms. I’m going to put the question to the Minister in a slightly different way, and I think it is incumbent upon him to give us an answer as to the substance, so that we can get to the bottom of this.

In the prior Government, there were years, prior to COVID, where we ran surpluses of 1.9, 1.5, 2.4 percent. Then COVID hit, and the subsequent deficits as a percentage of GDP were 1.3 percent; 2.7 percent; 2.4 percent; and this year, if we include that as a Government year, 2.7 percent. Every one of those was criticised by the then National Opposition as being fiscally irresponsible. Yet the forecast for this coming year is a deficit that is larger than any deficit, except for the COVID year, of 3.1 percent—a deficit of 3.1 percent of GDP—which is one of the reasons why this Government has the increasing Government debt that I have referred to.

Now, by my calculation, Minister, these tax cuts here of about $2.5 billion per annum that are covered by this bill are the equivalent, given that GDP is about $400 billion, of 0.5 percent of GDP. So I want the Minister to either deny or accept that the fiscal effect of these tax cuts is to increase the deficit from 2.6 percent—which it would have been otherwise, excluding the tax breaks for landlords, which would have been in the vicinity of the 2.7 percent that the prior Opposition always criticised—and instead push it up to 3.1 percent, according to page 156 of (B.3), the Budget Economic and Fiscal Update. So, of that 3.1 percent deficit, which is an enormous deficit against the background of the deficits that we had to run post-COVID, in the context of the increased expenditure that flowed from both COVID and the inflationary pressures that followed all around the world and in New Zealand—how can it be responsible to bring forward tax cuts that, in that context, are going to increase Government debt?

Isn’t the real game here what we just heard from the speakers at the Child Poverty Action Group post-Budget breakfast—that I’ve just returned from—to increase the deficit to justify the austerity that you are going to visit upon this country in future Budgets as you drive the economy into dust, driving up unemployment, cutting public services, and increasing Government debt?

STUART SMITH (National—Kaikōura): I move, That debate on this question now close.

CHAIRPERSON (Barbara Kuriger): I’m going to call the Hon Dr Deborah Russell. I’m looking for new content now, because I’m aware that we’ve been on this part for probably almost two hours, and we’ve got several more parts to come, which will also be relevant. But I’m going to take one more call and I’m listening for very new.

Hon Dr DEBORAH RUSSELL (Labour): OK. Thank you, Madam Chair. You know, this is the examination we have of this extremely important bill in lieu of having had a select committee stage. There is a series of questions here that we could have dug into at select committee and we still need to have a think about them here.

I want to refer to something the Minister of Revenue said last night and some more information about that, which I haven’t covered yet, coming out of the regulatory impact statement. Now, last night, I questioned the Minister about the lead times that payroll providers needed in order to get these tax threshold changes in place in time for people to actually get the money in their pay packets. I pointed out that Inland Revenue itself said, in the regulatory impact statement, that payroll providers really needed to have a three-month lead time. Now, from 30 May to 31 July, when these changes come in, is two months.

So I checked with the Minister. I said, “That doesn’t seem like a very long time and they actually need three months.” He pointed out that the regulatory impact statement was dated on 24 April, and in that time, between when the regulatory impact statement came out and the Budget itself, there had been some ongoing consultation with payroll providers to ensure that they’d be able to get the changes in place. So they were pretty sure that they could meet that two-month lead time.

CHAIRPERSON (Barbara Kuriger): Is there a new question in this?

Hon Dr DEBORAH RUSSELL: Yep, there is a question coming right now. The Minister was sure about this. So I want to ask the Minister: can he guarantee that every employee will get the tax threshold changes in their pay packet in their first pay after 31 July? He said that they had consulted payroll, so I want to know: can he guarantee that? So that’s the first question.

I want to carry on because there’s some more information in the regulatory impact statement that we haven’t covered yet. I want to draw the Minister’s attention to paragraphs 49, 50, and 51 of the regulatory impact statement, which have not been discussed yet. Now, we discussed some of the large Government organisations in terms of their payrolls for their employees. But paragraphs 49, 50, and 51 point out that some large Government organisations have a whole set of other people to whom they are directing payments that are subject to income tax, and, in particular, payments made by the Ministry of Social Development (MSD) to beneficiaries, payments made by ACC under the compensation system, and payments made by the Ministry of Health. Now, we’re talking lead times for payroll providers, and in paragraph 51, there are very specific numbers about how long each of those organisations think they need. So to make the necessary IT changes to ensure that people get that money in their back pocket, in their first pay, after 31 July—and that’s what the Minister has told us he can do—ACC—

Tim Costley: You don’t want them to get the money.

Hon Dr DEBORAH RUSSELL: —take a call—says that it needs eight to 13 weeks. So, OK, ACC is going to fit within that lead time or maybe the earlier lead time. MSD says that they need about three months from the Cabinet decision. Now, I’m taking it that the Cabinet decision would have been made on 1 May, that’s the first Cabinet after the regulatory impact statement. But here’s the cracker: Health New Zealand says it needs four months—it needs four months from the date of the Cabinet decision. Big workforce there, and that’s what Health New Zealand said.

So the Minister has put in place some changes to tax thresholds and he said that he’s confident based on the consultation with payroll providers that it can be done for employees, but then, sitting in the regulatory impact statement for Health New Zealand, one of the largest employers in this country, is the very clear information that they need approximately four months from the date of the Cabinet decision, and that’s only if they get told about it in advance of the Budget. It happens, because we’ve got to get that sort of thing sorted. Now, the date of the Cabinet decision was 1 May, at the earliest—so 1 June, 1 July, 1 August, 1 September. When are those people employed by Health New Zealand going to see the impact of these tax threshold changes in their pay packets?

Now, the Minister has been absolutely confident that it can be delivered. I would like that guarantee that every employee will see the impact of the tax threshold changes after 31 July—in their first pay packet after 31 July. He was confident last night—[Time expired]

TIM COSTLEY (National—Ōtaki): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

CHAIRPERSON (Barbara Kuriger): The question is that Arena Williams’ tabled amendments to clause 4 in Part 1 to replace dates with “31 July 2024” and “31 December 2024” be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendments not agreed to.

CHAIRPERSON (Barbara Kuriger): The question is that Ricardo Menéndez March’s tabled amendments to insert new clauses 4A and 4B be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendments not agreed to.

CHAIRPERSON (Barbara Kuriger): The question is that Arena Williams’ tabled amendments to clause 4 in Part 1 to replace dates with “1 July 2024” and “end of September 2024” be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendments not agreed to.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Part 1 agreed to.

Part 2 Income Tax Act 2007 and Tax Administration Act 1994 amendments commencing 1July2024

  

CHAIRPERSON (Barbara Kuriger): Members, we now come to the debate on Part 2. Part 2 is the debate on clauses 8 to 24, “Income Tax Act 2007 and Tax Administration Act 1994 amendments commencing 1 July 2024”. The question is that Part 2 stand part.

Hon JO LUXTON (Labour): Thank you, Madam Chair. I wanted to discuss, in particular, the childcare rebate. I find this a very clunky and unusual way of giving supposed relief to families. There’s a number of issues that I want to traverse in my contribution, and questions that I want to ask of the Minister of Revenue.

As an ex - early childhood teacher and centre owner myself, I’m interested to know if there’s been any consultation with early childhood centres and if this is going to create any additional workload for them—are they going to have to provide a certain type of receipt of paperwork for families that they will need to use to get their rebate from IRD? If I think back to my time in early childhood education, parents would often lose their receipt, their general receipt. They found it tricky enough to fill out everyday paperwork requirements within early childhood education itself. So you’ve got families who live extremely busy, busy lives—families where both parents often work, with one often working two jobs just to make ends meet. And you’re giving them this rebate where they’re going to have to fill out all this paperwork, collect their receipts, and pay for the childcare upfront. So let’s be very clear about that. The money comes out of their pockets straight away; there is no relief straight away. They have to pay upfront, these families who are supposed to be getting relief from this Government. They have to pay money upfront, and we know that early childhood education in New Zealand is some of the most expensive in the world.

So they’re going to have to pay this money upfront, then collect all their paperwork—and they can only do this every quarter—take it along to IRD or send it off to IRD, and await their rebate, which will take some time to come through.

So my question to you, Minister, is: how on earth is putting an extra administrative burden on families in order for them to get a rebate several months down the track after they’ve forked out the money that they can barely afford to spend anyway—how can you expect this to be successful? It is just clunky, and I’m interested to know how the Minister sees this is going to be of any real benefit for families other than creating more administration and pressure on families that have busy enough lives as it is.

Hon PEENI HENARE (Labour): Kia ora, Madam Chair. Thank you very much for this opportunity. I stand interested, too, in the same matter of the rebate here. I’m a former kōhanga reo pupil myself; I think the first kōhanga reo pupil into Parliament—just a little something for us. Apparently, the kōhanga reo generation is here—been here for 10 years.

But, look, to the point: the regulatory impact statement is quite clear in talking about the participation rates of Māori, the cost there is, and the administrative barriers for Māori and Pacific families. But I want to focus on Māori as it’s the one I know about the most. You’ve seen with their tamariki o te kōhanga reo that the burden on them to continue to receive a rebate in this respect is cumbersome, it’s onerous, and it will only further reduce the uptake on Māori for putting their tamariki into early childhood education (ECE). The regulatory impact statement (RIS) makes it very, very clear. It says there that it “will provide a reduced benefit to Māori and Pasifika families due to these groups being less likely to pay for childcare, either due to ECE subsidies covering the costs already, lower ECE participation, or greater participation in informal/non-cash-based childcare.”

This is a huge blow to many of the working families out there who want to send their tamariki to kōhanga reo. It’s already difficult enough to get tamariki into kōhanga reo, and now they’re being asked to front up with these costs. But then there is the administrative burden of going along to make sure that they receive their rebate.

The next part to that is: what does this mean? It’s not quite clear, and I’d like the Minister of Revenue to explain to us what this means when it comes to kōhanga reo themselves supporting families to administer this particular rebate. That isn’t an answer that’s clearly provided for in the RIS, nor is it in the bill, so I’d really appreciate it if the Minister could help us all understand what this means and what the burden means for the ECE provider. It says something in the bill there that the forms have to match up to the IRD. It says that in Part 2, clause 41C—yep, I think that’s the one. It says that the ECE provider has a little bit of work to do to make sure that they match up with the IRD forms, and I’m wondering: (1) what does that cost our ECE providers and, in particular, kōhanga reo, who already struggle for money; and (2) will that then be passed on to families in increased cost for families who wish to put their tamariki into ECE?

So those are the questions I have for the Minister, and if he can explain what material impact that has, in particular, on Māori families, and whether or not, in their decision making, the Minister and the Cabinet considered how this will impact Māori and whether or not their uptake of ECE will rise or fall—it’s clear in the information in the RIS and in the feedback that we’re getting already from the kōhanga reo sector that it will materially impact our families in the community.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. Just in response to those questions, the FamilyBoost policy goes actually to the heart of what the last member was referring to in terms of the implications on families across the country, and is significant as a result of the early childhood education (ECE) fees in which they need to incur. In comparison to the status quo—i.e., doing nothing—this Government and this bill are implementing the ability for families to receive 25 percent of those ECE costs, up to a maximum of $150 per family per fortnight for those that are earning up to $180,000—to have the ability to get that rebated back. Compared to the status quo, that is a significant benefit, and that money, irrespective of the background of those families, will be available for them to use against the impacts of the cost of living.

The regulatory impact statement at clause 29 clearly says that Māori and Pasifika families are disproportionately impacted by the implications of ECE costs, and those families will benefit through the implementation of this policy, and that is a good thing in comparison to the status quo.

In regards to Jo Luxton’s questions in regards to some of the conversations around how the rebate will work and language around that, again, the regulatory impact statement does outline some of the considerations around the way in which the ECE sector was engaged and was discussed, and that engagement was undertaken, acknowledging that there are considerations around Budget secrecy. But, at the end of the day, the objective for this coalition Government is to get that benefit into the hands of hard-working families who have children in ECE, as far as practical, and the considerations and the balances that my department and IRD need to draw is ensuring that we’ve got an ability to ensure that those who are receiving those rebates will receive the appropriate amount of revenue back from that, to ensure that we’ve got a good process in regards to compliance as well, and to ensure that who is getting the money should get the money. And I think we’ve found that balance between the speed at which we execute and making sure that we ensure that the money goes to those who need it most.

Hon JULIE ANNE GENTER (Green—Rongotai): Tēnā koe. Thank you, Madam Chair. Thank you very much to the Minister of Revenue for his comments. Since we have moved on to Part 2, I have some questions specifically about the FamilyBoost package, which will help some people with early childhood education costs. But I still want to focus and come back to a question I had asked last night, and the Minister responded to, about annex 2, which is the distributional analysis of options in the regulatory impact statement.

CHAIRPERSON (Barbara Kuriger): If the question relates to Part 1, we can’t go back there, and I—

Hon JULIE ANNE GENTER: Madam Chair, if you will, this distributional—

CHAIRPERSON (Barbara Kuriger): If it’s in this part, that’s fine. I’m just clarifying.

Hon JULIE ANNE GENTER: —it includes—

CHAIRPERSON (Barbara Kuriger): Don’t argue with the Chair, please. I’m just saying that if it relates to Part 1, then we won’t go back there, but if there is a part in Part 2 that’s related to your question, we can take it.

Hon JULIE ANNE GENTER: Madam Chair, as I was saying, option 2—the distributional impact analysis—is for the whole package, which includes FamilyBoost, which is in Part 2. So I think the distributional impact analysis applies to more than just Part 1.

But I did have a follow-up question on his answer on that, because last night when I asked the Minister about how the—in Figure 1, it shows the impact on household incomes by equivalent income quintile, which means we break down people’s household income into five parts, and it shows that most of the benefit is accrued to the top two quintiles, to the highest-income families. The answer that the Minister gave at the time seemed to indicate that there were other transfers and that that was just the changes in the personal income tax thresholds. But, as I read it, it says that this distributional analysis applies not only to the change in personal income tax thresholds; it applies to the additional transfer policies—that’s what this says—including FamilyBoost, the in-work tax credit increase, and the expansion.

So I guess my question to the Minister is—because he’s saying that you can’t just look at the tax changes in isolation; they’re a whole package. But Figure 1 shows the weekly impact of the package on household incomes. So are there other changes over and above what’s been analysed here that would change the distributional analysis that shows that higher-income households in New Zealand benefit more from the package of changes, including FamilyBoost, which is in Part 2, and, if that is the case, where is the distributional analysis that shows those additional policies? Because, from what I can tell, the package—and bear with me—includes four policies, which include the FamilyBoost policy, the in-work tax credit, and the other policy that is brought in by this bill.

Furthermore, I thought it was interesting that the Minister just referred to the status quo and how families with children will benefit. But the status quo would have been, as of March this year, universal 20 hours free for two-year-olds, which would have had a much bigger impact on many more families. So I’m not sure, Minister, that it’s fair to compare this policy, which is very complicated and very difficult to access. And I suspect that it’s been designed that way to reduce the cost of it and to make it harder for some people to get it, because a lot of people won’t have the ability—especially when you have young children, it’s the hardest time in your life. I can speak to this right now. To do life admin of filling out forms and trying to reclaim a reimbursement four times a year—when do we have time to do that? If you’re working full time and you’ve got little children who take a lot of parenting, when do you have time to sit down and do all this admin? It would be so much easier to just extend the benefit to everyone with the 20 hours free.

So, according to the distributional analysis, FamilyBoost affects net incomes for 4 percent of all households and 12 percent of households with children. So 88 percent of households with children are not benefiting from FamilyBoost. And speaking specifically to Māori families, again, this analysis as compared to the overall population—relatively fewer Māori and Pasifika peoples and women benefit from the overall package, including FamilyBoost. So I’m interested in how the first question in this distributional analysis seems to indicate that the whole package, not just the personal income tax changes—

CHAIRPERSON (Barbara Kuriger): The member’s time has expired.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Madam Chair. Thank you for the opportunity to take a call on this, which will be, I think, a big part of this section, because it’s the only part we can discuss it. It’s my amendment on the tabled amendment that I’ve presented to the House, and I’ll bring the Minister Simon Watts’ attention to Part 2, clause 3A, which inserts a new clause 3A into his Amendment Paper, and that would seek to amend section MD 13 of the Income Tax Act 2007, which this part of his Amendment Paper amends. The reason that this is probably going to be quite a big part of this section is that it’s to do with the abatement thresholds, and its impact on the whole-Government tax plan is quite large.

So let me start with: what was sort of trailered and outlined prior to the Budget by the National Party about this amendment that I have put is that the family tax credit would be one of the main drivers of the distributive benefits of their tax plan and it would help lower-income earners to receive a greater proportion of the benefits that were being distributed by it. So my amendment would seek—you know, it’s not something that I necessarily agree with, but it is what was promised by National going into this Budget, and this amendment is required to do that. So I’d like to engage with the Minister about what has changed in this bill, what was promised prior to the introduction of this bill and why they are different, and how my amendment would seek to close that gap.

So, under the family tax credit, you get $25 more, but it abates at the same rate and at the same level of income. Actually, there were two changes that were signalled here. One was that $25 change, which is good. It’s good to see that people with children will be getting $25 extra; that’s something we support. But, actually, the bigger cost to the Government that was canvassed prior to this bill, which has not been done by this bill, is that the change to the abatement threshold would be made in this kind of legislation, and that’s where you would do it. The change to the abatement threshold is actually a bigger change to the Government’s books, and it would make a bigger change for tens of thousands of families who would then become eligible for extra support, and that hasn’t happened here.

So, prior to this change coming in—I also want to hear from the Minister, because it was said around the election campaign time that it would fit within the operating allowance to both do the $25 change and the change to the abatement threshold and that it would fit within the limits, but we’re seeing here that that decision has not been made. So why was it that that was intended to fit within the Budget operating allowance but now does not fit within the Budget operating allowance? What trade-offs have been made? Have they been made in this bill, or are they elsewhere? This is something that we need to get into.

I also would like the Minister to comment about whether the trade-off that’s being made here with not being able to do the abatement threshold is because of the interest deductibility cost, that has cost more than the Budget operating allowance that was canvassed prior to this bill being introduced into the House. So I want the Minister to engage with me a little bit about that before I ask him some more questions about the family tax abatement threshold.

INGRID LEARY (Labour—Taieri): Thank you, Madam Chair. This has been quite a technical debate, but I have to go back to basics for the people of my electorate in Taieri and ask what on earth—what on earth—was the Government thinking when it introduced this kind of complicated rebate that people who do not have internet connections, because they have an average annual income of $26,000 a year—many of them cannot afford to have home computers or internet. How on earth does this serve them? And it’s interesting to see members opposite sniggering. I find that incredibly patronising to the people that I have the privilege of serving, people who have a family average household income of $26,000 a year. For many of them, they struggle to put food on the table. They struggle to get their kids to school. And now we are saying that they need—in order to get this rebate that is supposed to be helping them—to have an internet connection and to have the ability to do complicated paperwork, when they are just trying to survive day to day.

Wouldn’t it have been better to look at some of the policy options that are listed in the regulatory impact statement (RIS) under section 19, such as “reducing ECE fees through a direct subsidy to providers”? Now, I’d like to know if the Minister even considered that, because for many of the parents in my electorate, the ability to have the paperwork taken away and to have the really good early childhood education (ECE) providers in Taieri, in the rural communities, who are listed in the RIS as also being one of the population groups that would be disproportionately disadvantaged by this, that would have a barrier around it. It would be so much easier for the ECE to have a direct subsidy and those parents not to have to worry about this. Did the Minister consider that, or, because of the speed and the time by which they are trying to do this, did they just ignore that possibility? Did they not consult?

And I note that the Minister said in his previous contribution that he talked about process and the status quo. Well, the problem with doing something like this is it looks like a fix and it kicks the can down the road for the people that will not be able to access this subsidy. So when the Minister made this trade-off about trying to introduce something that he said was speedy and was going to make a difference, did he consider the risk that those who would not be able to access it, for many different reasons that are being raised by colleagues on this side of the House—did he consider the risk of now looking like there is a fix when, in fact, it is kicking down the road a real solution that could have been consulted on properly?

I note, Madam Chair, that in section 18 of the RIS, it talks about the fact that there were options that could not be examined in detail, because of scope and time. I’ve talked about the ECE fees, but what about also regulatory price controls or changes to reduce the impact of other regulatory systems that increase operational costs for providers? For example, the play space requirements. That is a piece of really important policy work in the ECE sector. That is a strategic approach—if this kind of approach had been taken to look at what could be done to support ECE providers to be able to make the difference that would be passed on to the parents. It really breaks my heart to think that not only are these families forgotten—the families of the deep South who do not have the means to be able to do this or access to the internet—but that somehow, now, it’s being portrayed that there is a well-intentioned Government that is trying to look after them.

They are deliberately making it difficult—or perhaps they live in an alternative reality where everybody has a whole lot of time to sit around in their homes accessing their many computers and doing their paperwork. Well, that is not the reality for many of the rural families in my electorate, and it is not the reality for the families that live in Corstorphine, for the families that live in Calton Hill, and for the families that come to my electorate office and ask for support for any kind of paperwork for pretty basic things. You have just put another door in their face. So my question—and I have asked questions. [Interruption] Great to see the Government members engaging so much with this—obviously they’re very, very interested in this debate. I would like to hear those answers because, clearly, this has just been a once-over lightly.

Finally, “increases to incomes of families utilising ECE through other government support and/or wage growth”. What did the Minister do around value for money and targeted support to say how this intervention was going to help low-income families and rural families in Taieri and other places across New Zealand, instead of just trying to get this out the door?

Hon SIMON WATTS (Minister of Revenue): Well, Madam Chair, I thought we were doing quite well with the quality of questions until the last contribution. What I’ll remind the member Ingrid Leary is that about 96 percent of the New Zealand population has access to the internet, and then, when you throw in the ability to use one’s phone in that, I’m sure access to the internet in that member’s electorate, in regards to be able to claim this, is not going to be a significant issue. However, if there are individuals who do not have the internet, the ability to access Inland Revenue’s myIR website is through public libraries and other assets like that. There are mechanisms through which people can deal with this, but the whole fact is, I think, a lot of people have access. So I’ll leave it at that.

In regards to the questions raised in regards to the fiscal implications or trade-offs in regards to Arena Williams’ questions around the aspect around FamilyBoost, there was a consideration around that point. We’ve had to make trade-offs in regards to a number of aspects of policy. The fiscal considerations of increasing that abatement threshold was at a degree that we chose not to do, and that’s a decision that the coalition Government has taken. But what is clear is that the benefits versus the status quo are significant for a large number of New Zealand households with children, and that benefit will flow through as soon as practical.

Hon JENNY SALESA (Labour—Panmure-Ōtāhuhu): Talofa lava, Madam Chair, and thank you for the call. Manuia le vaiaso o le Gagana Samoa, and that is where I would like to begin my contribution, my questions, this morning.

The comment from the Minister of Revenue that everyone, or 90 percent or so, have access to the internet actually does not address the fact that some people, including Samoans and Tongans, may not be literate in English. They may be fully literate in Samoan, they may be fully literate in Tongan, but that does not actually necessarily mean that they are literate in English. That is actually one of the questions I’d like to pose to the Minister. How is this Government going to address the cultural and linguistic needs of Pacific families in relation to the FamilyBoost tax credit? Are there any materials and assistance available in languages other than English?

I would like to refer to the census data that has just come out two days ago, which actually shows that Pacific people make up 442,632 people in Aotearoa New Zealand today—an increase of 16 percent compared to the last census figures in 2018. So we’re talking about a huge number of the population.

The other thing that we need to also consider is more than 50 percent of Pacific people actually have young families. So when you look at the regulatory impact statement, one of the things that it actually covers is the fact that, in paragraph 31, any Government support targeted at alleviating early childhood education (ECE) costs will provide a reduced benefit to Māori and Pasifika families due to these groups being less likely to pay for childcare, either due to ECE subsidies covering the cost already or to lower ECE participation.

I’m sure it is actually the intent of this Government—any Government—to ensure that we have better participation for early childhood, because it is to all of our benefit that we encourage as many families as possible to ensure that they have their children participating in early childhood. But here’s the thing: not as many of our families do participate in early childhood, whether we’re talking about Māori families or Pasifika families and, if we’re looking at South Auckland, quite a lot of our ethnic community families as well. If we’re to look back at the census data, the highest rate of increase is our ethnic families, those who are new migrants to our country. We know that they are going to continue to be the fastest-growing population in Aotearoa New Zealand.

So the question that I pose about Pasifika families also equally applies to ethnic families. Is the Government going to ensure that the materials that they’re going to provide will ensure that our ethnic families know how to actually access this FamilyBoost credit so that they can actually ensure that they can claim this tax? Giving families who are really busy—especially families with two or three or four kids—who may not necessarily be literate in English, and who may not actually have access to the internet, an extra task of how to claim this funding is actually not fair. It is not fair. There, I’m sure, would have been a better way of ensuring that this kind of support from Government is something that many more of our families could actually claim.

Another question I would have is: how are we going to ensure that those who do not currently participate in the online platforms or in traditional media know that this FamilyBoost is even an option to them? Many of our ethnic communities do not necessarily watch our mainstream media, whether it’s TV. They have their own ethnic community radios. How is this Government going to ensure that they will know this is something that they can claim? Are they going to also translate materials into all of the major ethnic community languages that we should? Those are the questions I would like to pose the Minister. Thank you.

Hon SIMON WATTS (Minister of Revenue): Yeah, I thank the member for the question. The Inland Revenue already provides a wide range of language support services. If customers are not fluent in English, then their family members can support them to call 0800 700 334—that’s 0800 700 334. That’ll go through the IRD department, and a language interpreter, including those that are able to speak Samoan, will be available to walk through those constituents to help them with the FamilyBoost policy. You can get more information on IRD’s website.

Dr LAWRENCE XU-NAN (Green): Thank you, Madam Chair. This particular part is of great interest to me, as the Green Party spokesperson for education, and I do have a whole series of questions on this particular part. But I would like to start with a broader question around this, and I appreciate that this would have been something that we were able to tease out in select committee, which is: what sort of modelling—and I appreciate what the Minister of Revenue is trying to do in terms of alleviating some of the financial burden this places on families. So the question is: what modelling has the Minister or the authorities done that suggests that the additional money isn’t simply going to be absorbed by, in particular, for-profit early childhood education companies?

So the reason I ask this is in the data—for example, in the Consumers Price Index childcare index from January 2005 to June 2022, it stated that as part of a new introduction, although it alleviates the cost immediately, the sector—particularly the for-profit sector of early childhood education (ECE)—will soon catch up to that cost. Privatisation of ECE is a hungry beast, and the for-profit companies of ECE will absorb some of these costs, as we have seen in the past.

Another report also shows, when you analyse it, that—in the OECD report, which analyses more than 25 countries, it says that with tax rates and benefits, it is estimated that a New Zealand household with two preschoolers and two parents working full-time at an average wage spent 37 percent of their net income on childcare. That is triple the OECD average of 13 percent. Again, when we are looking at policies like this, what mechanisms and what modelling has there been that suggest that the sector isn’t simply going to catch up and absorb that cost?

I’d also like to draw attention to the regulatory impact statement (RIS) for FamilyBoost. What is quite concerning, when we’re looking at paragraph 14 of the RIS—and this is something that has also been reported extensively—is the fact that there is simply a lack of fees data when it comes to early childhood education providers. We do not keep that kind of data. One of the biggest limitations and barriers in this, for both the Ministry of Education as well as Inland Revenue, is around the fact there is a lack of fee transparency that we’re seeing in this sector. So, again, to the Minister: what additional modelling and information and evidence has been produced since the release and the printing of the regulatory impact statement to reassure families, to reassure parents with multiple young children?

We already heard from my colleague Julie Anne Genter in terms of the compliance burden and the administrative burden this will create on parents of young children. I’m sure, for those on the other side of the Chamber—with Dan having become a new father—this is something that he will be very interested in as well. What sort of modelling has been provided that suggests that this money simply isn’t going to be reabsorbed by the sector and that it provides not just administrative burden but genuine relief to that?

With that, I would like to point to another section of the operation—and this is the refund model. We’re looking at options two and three on pages 16 to 17 of the regulatory impact statement for FamilyBoost, paragraph 58. It says, “The impacts of the non-monetised costs and benefits have been determined through Inland Revenue’s previous [operation] … [and] assumptions made on the cost for parents and the ECE sector.” But what is concerning is the table itself says that the total monetised costs, in terms of the benefits, are “To be confirmed”, and the non-monetised benefit of this is “Low”.

So, again, if the Minister wouldn’t mind shedding some light on the overall picture of FamilyBoost and exactly how much benefit is going to provided, because the data and evidence we have here is not clear.

Hon JO LUXTON (Labour): Thank you, Mr Chair. I’m only on to the second page of this regulatory impact statement, and I’ve got several questions that I would like to ask the Minister here. I do know that the fees structures in early childhood education (ECE) centres vary very broadly across many centres, and there is no oversight, exactly, of what centres charge parents in the way of fees. I note that it says here that “The lack of fees data also impacts the practicability of a tax credit linked to childcare expenditure.” So if you don’t have that data, how do you determine what is the best way to provide this tax credit? Would it not have been more prudent for the Minister or ministry to undertake a whole lot of work around the fees and fee structures of ECE centres in order to deliver a better option?

The second question I have for the Minister is—I note here that it says, “Inland Revenue has not been able to undertake any consultation with the public due to time constraints and Budget secrecy conventions”, and I get that, but this very policy impacts the very public, the people who are most important and who are most affected by this change. There has been no consultation with parents in order to understand what they think about this proposed policy. And I know that it talks about Budget secrecy. However, the National Party did campaign on this, so I believe there’s been plenty of time to consult with parents about their views on whether this was actually going to be workable. We’ve heard that it’s going to be terribly, terribly administratively burdensome. So my question is: why on earth was there no consultation undertaken with parents who this impacts the most?

Hon JAN TINETTI (Labour): Thank you, Mr Chair. I too want to talk about, and ask a question to the Minister of Revenue about, the people who this policy will impact the most, which, perhaps, according to the regulatory impact statement, will make early childhood education (ECE) more restrictive to that demographic and to those people. There seems to be a lack of consultation between Education here and Inland Revenue and other demographics. It just seems to be a messy policy.

Last night, the Early Childhood Council came out and said that this Budget didn’t deliver for their members and, in fact, that it was actually like a cut to their members. Now, this is the Early Childhood Council, who have very traditionally probably been more right leaning on the political spectrum, but they are very disappointed in what this Budget means for them. And I notice in the regulatory impact statement that it says that “It is anticipated that without Government intervention, the current high inflation environment and trends in the price measures for the ECE sector may result in ECE costs continuing to increase.” Now, that’s exactly what was said to the Minister of Education last night by the Early Childhood Council—that is that this doesn’t meet the rate of inflation. And so, therefore, they are going to possibly have to put those costs and those cuts, as they see it, back on to the people who are accessing their services. What that means is that fees are likely to rise for those parents, because they cannot sustain the services that they have at the moment.

Now, we hear that this FamilyBoost is about increasing participation. Those two just do not match up. They cannot match up, because when you’ve got, on one hand, the Early Childhood Council saying that it is like a cut for their members and then you’ve got, in this, the FamilyBoost saying that this will increase participation, it just can’t. It absolutely can’t. So I’m really concerned about those demographics that find it really expensive now, those people who come from low socio-economic backgrounds who need early childhood education to be able to get themselves back into the workforce, to be able to participate in the workforce, and to actually give their young people a really good start in life through a really solid education. Those things really concern me, and it actually says that in the regulatory impact statement in paragraph 11. It says, “If ECE costs do rise,”—and we’ve already had that signalled over the last two days—“an increasing number of families may no longer be able to afford some ECE hours. This may restrict their ability to work or could result in pressure on other types of families spending to maintain ECE hours, consequently reducing families’ income adequacy, work incentives and/or ECE participation rates.” Now, that is really serious—really serious. Not only does it stop people accessing the workforce, but it hinders those young people who need that great start in education the most being able to access it.

So I have a really important question for the Minister. Surely the modelling has been done around this, with something that this party and the National Party campaigned on very much when they were in their campaign mode. They must have done the modelling around those demographics who would actually be hindered by this. I want to know what that modelling showed. I want to know how many young people from those low socio-economic demographics who need quality education, quality early childhood education, the most. How many will this hurt? Just like it says in the regulatory impact statement, how many will not be able to access that childcare? How many people will have work restrictions put on them because of this poorly thought-out policy?

Hon Dr AYESHA VERRALL (Labour): Mr Chair, thank you very much for the opportunity to take my first call on this bill. I want to pay particular attention to the clauses dealing with the FamilyBoost tax credit, particularly clause 12. I guess I appreciate the intent of trying to address costs for families, while I share the multiple concerns raised by the Hon Jan Tinetti just before me. But my question to the Minister of Revenue relates to the policy intent of this tax credit. Why is it that this particular focus of childcare costs was taken? And what was it that led to this being prioritised, this cost for families, while other costs have been put back on families in this Budget?

In particular, I’m thinking of the prescription co-pay waiver that was brought in in Budget 2023, that this Budget now repeals. That is, effectively, a tax on the sick. Now, the sick, who have to pay additional for their medicines, and young working people—many of the people will also be eligible for their tax credits—have to face increased costs because their prescriptions are no longer free. So why is it that the rebates are for this cost and not for the additional cost put on to people who have illnesses in New Zealand? Multiple costs: if you have a chronic condition, you’d expect to pick up multiple prescriptions a year. We know that there are multiple public policy benefits from having a policy in place which means that people are kept out of hospital. It’s thought that there’s a 34 percent increase in hospitalisations for people who have chronic conditions and cannot get their medicines, because of the changes this Government is bringing in. So why is it that this particular cost is being addressed by the Government through this clause and not the cost for people who have chronic conditions and who need medicines?

Not to mention, it’s not just people with chronic conditions who need medicines. Perfectly healthy people also need medicines. For example, women need medicines for contraception, and yet it seems like these costs aren’t considered important costs by this Government to address, and there’s a focus here on a small rebate. But, on the other hand, the Government, through its Budget, takes away an important support for people who need access to medicines in New Zealand. Thank you.

Hon KIERAN McANULTY (Labour): Thank you very much, Mr Chair. I appreciate the opportunity to have my first call on this. I have a series of questions for the Minister, but I’ll keep the contribution here to the first of those. The regulatory impact statement outlines quite clearly that there are concerns around the potential effectiveness of the policy that’s being proposed in Part 2 around FamilyBoost—in particular, the limitations on the assessment of this policy. It raises questions about whether the sector is able to make the necessary changes. It also raises questions as to whether this is the most effective way in which to deliver the policy intent. It outlines that there will be a post-implementation review to see if what is being proposed actually does what is suggested. And there have been some really important questions raised thus far in this debate that are yet to be adequately addressed.

So to add to that, if this doesn’t work, if the requirements on families, the administrative burden—and I’m thinking particularly those that don’t have access to what some families in larger urban areas do. So specifically rural families who don’t have access to the same level of internet and other technologies that would assist in what is required administratively in this—what if they can’t do it? And what if, at the end of the day, this policy isn’t actually effective for those families? In that post-implementation review, what is the time frame on that and what does the Minister expect that that review will cover, if they truly intend to assist the families with the cost of early childhood education, as is outlined in the policy intention?

Hon DAVID PARKER (Labour): Thank you, Mr Chair. I have two questions, the first of which should be relatively easy and quick for the Minister of Revenue to answer. This part and the next part both make changes to the Tax Administration Act. It is impossible for us to check through the Tax Administration Act and check every section against amendments. In the last Government, we changed the Tax Administration Act to give the Inland Revenue Department the power to collect information for policy purposes, not just tax administration purposes. It was that power that was used in order to inquire into the effective distribution of wealth, tax paid, and economic incomes of the very wealthy.

That led to the Taxation Principles Reporting Act to report on those issues into the future. The Government, under urgency, repealed the tax principles Act. I know there are many people in society that didn’t like the scrutiny that came upon the actual state of affairs in New Zealand through the information collection powers for policy purposes. My first question is: I want confirmation from the Minister that nothing in this part, or indeed other parts—otherwise I’m going to have to ask the question again in respect of other parts—repeals or amends the section relating to the collection of information by Inland Revenue for policy purposes. That’s my first question.

My second question, sir, because I do believe in the to and fro on—well, actually, if the Minister is ready to answer.

Hon SIMON WATTS (Minister of Revenue): No.

Hon DAVID PARKER (Labour): Thank you for that confirmation. My second question relates to the fiscal consequences of the change to the FamilyBoost package. I can’t find the cost of this measure, to gauge its effectiveness, in the Budget documents. The summary of tax initiatives on page 49 of the Budget Economic and Fiscal Update includes global figures for changes to personal income tax and the independent earning tax credit, and some other things, but doesn’t list it. So it’s not significant enough to make that page. I’ve gone through the summary of initiatives, which goes through the Votes, or changes to Votes, by ministry. I’ve checked for revenue; it’s not separately listed there. I’ve checked the pre-Budget announcements; it’s not there. I’ve checked the Ministry of Social Development; it’s not there. And I’ve checked Education, and I can’t see it there.

Now, it is possible that I’m missing something, but I would like to know—and I think it’s fair of the committee to want to know—what is the fiscal consequences of the FamilyBoost package? And why is that relevant? Well, we ought to know that as we pass legislation that changes these rules, but also we know from other documents released in the Budget that the overall effect of this Budget is to increase the number of children below the poverty line. I think it’s relevant for us to know whether some other change to the FamilyBoost payment would have had a greater effect on child poverty. And we can’t tell, if we don’t know how much the cost of this initiative is. So I would like to know what the fiscal cost of the FamilyBoost package is.

LEMAUGA LYDIA SOSENE (Labour—Māngere): Thank you, Mr Chair. I’m very pleased to be able to have the opportunity to also add to the list of questions that my colleagues have asked. Minister Watts, it’s really important that I am able to give you, or highlight, the concerns from my community and also for the local Māngere community, because we have over 25 early childhood education (ECE) providers which sit across the spectrum from very well resourced, to community kindergartens, and we have lots of young people, little children, for whom education in our mother tongue and in our Samoan and Pasifika languages is very important. I do want to thank my colleague the Hon Jenny Salesa for pointing out some of the issues.

So, Minister, I have questions around the consultation, because some of the decisions—and I’m referring to the regulatory impact statement, and I quickly read the information that has been provided. Why has there been no specific consultation with Māori, with Pasifika, with ethnic communities—

Hon Member: And rural.

LEMAUGA LYDIA SOSENE: —and rural communities. That ECE, which gives a great boost for languages and early childhood education, is a very important component in a child’s life. Why has there been no consultation, Minister?

But, Minister, also too, it tells of all the benefits in the regulatory impact statement of this policy, but there’s a big weighting aside that the onus is put directly on families. The assumption has been made that many of the families who this impacts are well resourced. What about the families who have English as their second or their third language? How are they supposed to get around understanding this new policy and the speed of this policy?

Minister, I also want to ask: what was the consultation with ECE centres—specifically, ECE centres that come from areas where there’s more than one language, such as te reo Māori, but also in rural communities—and why has that not been provided for our members to understand the impacts of this?

Also, Minister, for your information, it now provides a competitive factor for ECE centres that were working really, really well in terms of a community like Māngere or South Auckland.

So, Minister, I want to say to you that the policy of FamilyBoost has some good intentions, but it provides a number of problems that our families are going to be faced with in communities that I represent. It’s really important that the education that is given to communities for who English is their second or third language—that they understand clearly what the benefits are of this policy. How will that help when you’ve got a very diverse community in different parts of Aotearoa? What is the face of the future of those young children whose parents may not be able to access the system, because it’s just too complicated, Minister? I appreciate that you have provided that Inland Revenue does have a service that provides interpretation or staff. Is Inland Revenue going to be resourced well to cope with the demand that is coming? It’s coming in on 1 July—that’s what we’ve got in front of us.

So, Minister, if you could help me understand those specific issues, it would be really helpful. Thank you.

Hon SIMON WATTS (Minister of Revenue): Well, thank you very much. It’s good to hear a number of members on my left are supportive of the FamilyBoost policy. I’m looking forward, hopefully, maybe, to see them supporting this part of the bill when we come to the vote.

In regards to the Hon David Parker’s questions—actually, the answer to your question is in the fact sheet, which is outlined as part of the documents supporting the Budget. There is a line there for FamilyBoost which outlines the average fiscal impact on the Crown over the period of the Budget.

Hon David Parker: What is it?

Hon SIMON WATTS: Page 7, which is $0.18 billion on average—$667 million over the total forecast period. It’s also outlined—I appreciate the member might not have done too many Budgets before—in the summary of initiatives document, as well, where it’s outlined on that.

Hon David Parker: What page? Because I couldn’t find it.

Hon SIMON WATTS: I haven’t got the page, but I’m sure if you have a look through it, we’ll come back.

The other questions by the Hon Jo Luxton in regards to public consultation: I’ve covered that in earlier questions. It’s also included in the regulatory impact statement.

The questions by the Hon Jan Tinetti in regards to the distributional impacts: again, there were questions raised by other members on the same question for which I have provided contents, and there is also information in the regulatory impact statement.

The Hon Ayesha Verrall, in regards to trade-offs between health and other aspects: well, I’m proud that we’re a coalition Government that is putting $8 billion more into health. That is a significant implication, but we’re talking about a tax bill here, and we’re clear in terms of our priorities as part of that bill.

The Hon Kieran McAnulty, in regards to limitations or implementations around the assessment process and the actual review: again, I have answered those questions already. There’s information as part of the regulatory impact statement, again, in regards to that, and those are pretty much the questions that I put on my list.

Hon KIERAN McANULTY (Labour): Point of order, Mr Chairperson. I’m just seeking your view on a situation when, over an extended period of debate, which this is—obviously, it started yesterday, and this has carried on through to today—if a Minister claims to have answered a question but that is in dispute, how would you consider that, because I know that the Minister’s response to questions—

CHAIRPERSON (Teanau Tuiono): Could you turn this into a point of order, and then you could take it as a call. But it’s not—

Hon KIERAN McANULTY: I’m sorry, sir—I did call for a point of order. It might have been missed. Point of order, sir.

CHAIRPERSON (Teanau Tuiono): Well, my understanding is that this is not a point of order. So if you could actually point to where the order has been disrupted or the Standing Orders or—

Hon KIERAN McANULTY: Well, sir, we understand that a large part of the criteria by which you assess whether an issue has been dealt with is the Minister of Revenue’s engagement with questions. My concern is that, as has just happened, the Minister has claimed that he has answered the question and it is very much in dispute by members on this side of the Chamber, because we believe that just simply touching on the same subject actually isn’t answering the questions. So my point of order is a question, and that is: how will that be assessed by the Chair? Because if a Minister simply says “I’ve answered that.” and that is taken as fact when it is in dispute, the concern from members on this side of the Chamber is that that will be deemed as engagement when, actually, we believe it not to be.

CHAIRPERSON (Teanau Tuiono): Just for the clarity of the committee, we do have track sheets. I am trying my best to track, from my perspective, whether the questions have been addressed or not—hence, the reason why I gave you the last call. But we’ll take another call.

Hon Dr DEBORAH RUSSELL (Labour): Thank you, Mr Chair. I’m very grateful to have finally been given a call on this part of the bill. My colleagues have traversed a number of the issues to do with the bill from the point of view of people who might be eligible to receive this rebate. I want to traverse some rather more technical details, and I also have a series of questions around the administrative costs for the Inland Revenue Department.

Following on from the compliance costs that my colleagues have been talking about, I want to move to the administrative costs as to how Inland Revenue (IR) is going to handle this. Looking at the regulatory impact statement (RIS), there’s a pretty standard assessment of options sitting on page 14 of the regulatory impact statement—looking at option 1, which is the status quo, and option 3, which is expanding the time line for implementation. Now, that option 3 was one where the rebate would have flowed through to parents to use early childhood services much more smoothly, because it would have involved IR collecting information from early childhood providers and meshing it all together in their fancy information system and then sending refunds out automatically to people who had been paying childcare fees. Now, that option was discarded, because it would have taken two or three years more to get to it. So that option was not on the table, and, actually, if you think about the kind of IT build that was needed for it, that’s probably a pretty sensible move to not try to do that kind of thing.

The status quo is nothing, but then option 2—the basic refund models. We’ve got this refund model for this rebate. So families have to pay their childcare fees up front, they get the receipts from their childcare provider, they upload those to the Inland Revenue Department, and, all going well, the Inland Revenue Department sends them some money.

But, looking through the list of whether or not this is positive or negative, the positives in this table are that it increases the income of eligible families, which is obviously a positive, and they say that there’s a potential to promote fee transparency—I’m marginal on that, but, you know, I wouldn’t want to override the insights of the officials. But then there’s a series of negatives. There’s compliance costs for providers—that’s a negative. There’s compliance costs for customers—it’s a double negative. The fiscal cost to the Government is a double negative, but, you know, Governments make choices about where to spend their money. The time required for implementation compared to the status quo—obviously, that’s a negative. Anything new you’re doing does take time.

But the one that I’m concerned about is from the point of view of the Inland Revenue Department, and there is a double negative on administration costs. I just want to discuss this with the Minister of Revenue a little because there are a number of comments in the regulatory impact statement about how the costs associated with this option are going to affect the Inland Revenue Department. So if we’re looking at paragraph 72 of the RIS, which is right on the back page, it says that Inland Revenue is going to have to be required to develop invoice verification processes. They’ll be automated, where possible, but they’re going to have to check that those invoices—actually, I’m hoping they’re receipts proving that the person using the childcare has actually paid, because that’s what the model demands. They’re going to have to monitor for fraud. There’s going to be a bit of an integrity risk as it’s going to rely on invoices presented by parents, rather than the Inland Revenue Department directly receiving information from the providers.

There’s a whole set of administrative costs sitting in there for the Inland Revenue Department, so what I would like to know from the Minister is just how much more it is going to cost Inland Revenue to process these refunds, what kind of consideration that had on the thinking in terms of whether this was the best route to go down, and whether those administrative costs are justified, and I want to know what sorts of administrative costs have been taken into account. So, for example, we know that while most of the people claiming this refund will do it with a bit of honesty and integrity, there will be those who seek to game the system and to perhaps claim refunds that they’re not entitled to.

So I’d like to know, in terms of the thinking around the administrative costs for the Inland Revenue Department, how much thought has been given to how many extra people will be needed in order to police this arrangement, because there’s a whole set of integrity issues—

CHAIRPERSON (Teanau Tuiono): The member’s time has expired.

Hon SIMON WATTS (Minister of Revenue): I’m just responding to the member’s question in regards to the compliance implications. The member’s right. There are scenarios where, potentially, people will try to test the system. Those considerations have obviously been made by the department, and in terms of operational nature and the way in which they respond, they will do so appropriately. But it is something that has been considered and is being worked through as part of the process in which we assess to implement this overarching FamilyBoost policy.

The reality is that we’ve outlined—and I outlined it again, but I’ll say it again: just in terms of the overarching process, the balancing factor here was getting those payments into the back pockets of hard-working families as fast as possible, acknowledging that there are technical challenges around how we do that. The way which has been recommended by officials is the position which we’ve landed on. We acknowledge that there are going to be some challenges, but we’re balancing out the speed of execution versus the ability to ensure that we’ve got the right measures and balances in place, and I think we’ve got that.

CHAIRPERSON (Teanau Tuiono): The Hon Julie Anne Genter.

Hon JULIE ANNE GENTER (Green—Rongotai): That’s me? Oh, great. Mr Chair, thank you. I have a series of questions for the Minister. I would really appreciate an answer—I can’t find it in either the specific regulatory impact statement for the FamilyBoost or the more broad one. How many families are expected to receive the full benefit of the FamilyBoost? That’s the full $75 per week. Did he seek or receive any advice on how to ensure more families get the full support?

Then, why is it capped at $75 per family when a family with two children in full-time care—$75 a week will be less than 15 percent of the total cost rather than the 25 percent I know that the Government and the Minister have said they they’re really hoping to achieve.

Finally, about the rules—I guess I’m interested in the relationship rules. So how does the FamilyBoost work for single parents? If we imagine a single mother who’s paying all of her children’s early childhood education costs is eligible for the FamilyBoost based on her income but she ends up with a new partner—a de facto partner—after a couple of years who’s not contributing to her childcare costs, because it’s not their child, but that partner earns above the threshold, will the single mother still get the FamilyBoost, and, if not, why not?

Hon SIMON WATTS (Minister of Revenue): Just in response to that question, around 21,000 families will get the full impact of the FamilyBoost policy; around 100,000 families will be able to get some benefit from the overarching policy. Consideration was put in terms of single-parent families and the way in which the mechanics of that will work, including those that are with children in foster care and other considerations like that—all of that thinking was put through. The quite simple reality is that they will be able to claim the benefit through that process, and guidance around how they do that is included in the supporting material online on the IRD website.

CHAIRPERSON (Teanau Tuiono): The Hon Julie Anne Genter.

Hon JULIE ANNE GENTER (Green—Rongotai): Sorry, I can’t quite hear you, Mr Chair. Just on the third question about it being capped at $75 a week, though, does that mean it will be less than 25 percent of the total cost for those families that have two children in full-time care?

I do just want to come back to the question, Minister Watts—I think maybe you haven’t quite answered it yet—which is about this Figure 1 in the distributional analysis of options. It does seem to indicate that households with the highest incomes in New Zealand benefit much more than the middle and low income households from the total package, including the FamilyBoost. Last night, the Minister indicated that this was only an analysis of the personal income tax changes. However, the annex of the regulatory impact statement on the personal income tax relief does seem to indicate this is the entire package. So, even with the transfers that the Government’s announced, it does seem to disproportionately benefit the highest-income families. Is that correct?

Hon SIMON WATTS (Minister of Revenue): Yeah, I’ll just clarify that point. So the graph that the member’s referring to in the regulatory impact statement for personal income tax, in the graphs, is reflective of the four elements of the initiatives, not the individual components. It actually does encompass all elements. So just to correct that point. There isn’t any separate analysis of each bucket that we have, but what you’re seeing there is a combination of all of the policies.

Hon Dr DEBORAH RUSSELL (Labour): Thank you, Mr Chair. I’m sorry, I’m finding it a little hard to hear you, Mr Chair.

CHAIRPERSON (Teanau Tuiono): The Hon Deborah Russell.

Hon Dr DEBORAH RUSSELL: Thank you, Mr Chair, I appreciate it.

CHAIRPERSON (Teanau Tuiono): I’ll sit up straighter.

Hon Dr DEBORAH RUSSELL: I do want to bring something to the attention of the Minister. This will be my last call before I get into the technical stuff, if I do get further calls. It’s a message I got from a Rotorua father yesterday. He contacted me and said he’d taken a screenshot of what he thought that his family would get from these tax changes—the overall four changes that the Minister has just referred to. I have the screenshot here, and he says that he and his family will get about $190 a fortnight. But what he was confused about is when he was going to get that. So I’ll just read his message. He says—I won’t give his partner’s name, but his partner, “earning $100,000 and me getting nothing”—he’s a full-time caregiver—“with our two kids, four years old and one year old.” So it says they’re going to get $190.10. Sounds great. “So when does the money start flowing in? Or do I have to go through some sort of convoluted process? So unsure.”

So we’ve already talked a lot about the processes, but I think the question for this Rotorua father—and it was a very serious one, because the way it was presented in the tax calculator on the Budget website is that that $190 a fortnight would be available to him really from early August—that’s when the changes start flowing in. But I’m pretty sure that the way that this childcare tax credit, rebate, refund—whatever we’re calling it—is done is that, in actual fact, that money won’t get into that family’s back pocket until some time in October. So sitting on the tax calculator is the implication it’s going to be there from early August. He’s looking forward to getting that extra money. They need it in their family. They’ve got those two little ones in childcare. But I’d just like the Minister to clarify, for the benefit of that Rotorua father, when he and his family can start seeing the benefit of this childcare tax rebate. When will it actually arrive in their bank accounts? And I know it can be claimed from 1 October, but sitting in this, we need to understand how quickly the Inland Revenue Department can process those receipts. So what is a realistic time frame for this daddy to understand when that money will get into his family’s bank account?

TANGI UTIKERE (Labour—Palmerston North): Meitaki maata, Mr Chair. Thank you. This is my first call on this bill, and I have a number of questions for the Minister, in my capacity as Labour’s associate education spokesperson for Pacific. My questions relate around the ability for Pacific providers and for anau to engage with this proposed process in a way that is easy and right for them. It’s very clear that there are administration pressures that face the early childhood education (ECE) sector on a regular basis. So I’m yet to hear from the Minister around what level of support is proposed to be put in for those providers in order to meet the additional administrative expectations moving from what might be in many situations an annual form of accountability or receipting to, for many, four times per year. So that’s my first question.

Second is around this issue of consultation. I’m yet to hear a response from the Minister that directly relates to the level of consultation with our Pasifika community. I refer to the regulatory impact statement (RIS), specifically paragraphs 21 and 22, which identify that in terms of this creating an increase in administrative capacity, it will be important to consult with the ECE sector. But the RIS doesn’t just say, actually, it’s important; it uses the word “crucial”. So I think that’s a higher threshold. So I’m interested to hear from the Minister around what guarantees can be provided that there is a crucial level of engagement with the sector around these changes?

Another question from me is around whether families might be in a position—for example, if life administration is quite tough, and that’s the case for many—to have a number of receipts and how that might be easily accessed and able to be filed, and, if so—i.e., there’s a retrospective sort of condition—then what’s the liability for the Government as part of that process?

Statistics New Zealand identify that around 24 percent of children have care arrangements with grandparents. And in a Pasifika context, that can mean a whole range of things in terms of whether it’s a grandparent or an aunt or an uncle or what have you. Those are informal arrangements. When I look at the proposed subsection MH 3(5), I don’t believe that Pasifika family members would be eligible. Yet if they’re proposed to receive—many of them who might be receiving New Zealand superannuation—an increase of $2.25 a week, where is the level of support for that particular family dynamic in terms of the arrangements?

And, finally, just in terms of all the research, all the empirical data indicates that it can be very, very difficult—very difficult—for Pasifika community members to want to engage with many Government departments, agencies, and those sorts of things. I’ve heard the Minister talk about “Get a family member to provide support for accessing an 0800 number.” That seems to me to be potentially a further barrier for Pasifika whānau and anau. So I’m interested to hear what sort of face-to-face arrangement—and, again, this may have been borne out if there was a level of engagement with the sector, but I invite the Minister to address those questions.

Hon SIMON WATTS (Minister of Revenue): Just in regards to the member’s questions around consultation, I outlined a process. In addition to that, Inland Revenue is also consulting with early childhood education providers directly, in terms of some of the language considerations and that, depending on what is applicable. So, in addition to the services that they already provide, there will be services and documentation in different languages provided for those individuals, which covers off some of the points around consultation.

The question around when the money would actually go into one’s bank account: I mean, technically, and assuming that an individual—the father in the case that was raised from Rotorua—did an application that met all the criteria, in effect they could submit that on 1 October and they would be paid, due to overnight processing, on 2 October; hypothetically, assuming that everything else was appropriate. So that would be my message, and that would be backdated to 1 July.

Hon PHIL TWYFORD (Labour—Te Atatū): Thank you, Mr Chairman. My question for the Minister in the chair is: what is the percentage of eligible families expected to take up the childcare-fee refund option, based on the modelling that I assume was done to inform the Government’s policy choice in this area? The Minister said, in an earlier intervention, that he had answered Jan Tinetti’s question on this. I don’t believe, with respect, that he did. I have to assume that modelling on uptake was done. It would be negligent, I would think, if it wasn’t. And I would ask the Minister to comment on what that modelling says in terms of breaking down projected uptake on the basis of income, ethnicity, and one- and two-parent households, for example, which I think would be helpful to the debate that the committee is having.

It’s clear from the regulatory impact statement that the Government opted to go for the quicker option instead of the option that would have put in place a system that would have less compliance burden on families. As Deborah Russell has commented, it would have taken maybe a couple of years to put that in place. And I’m interested to know what the Minister’s rationale was, and what Cabinet’s rationale was, for going for the shorter-term option—

Hon David Parker: Or transitioning.

Hon PHIL TWYFORD: —or transitioning or going for the shorter-term option but actually putting in place the better option over time and transitioning to what is described as option three in the regulatory impact statement.

Hon SIMON WATTS (Minister of Revenue): The modelling that we undertook assumed 100 percent uptake.

Hon WILLIE JACKSON (Labour): Thank you. Kia ora—kia ora tātou. I’m just following the kōrero from some of my colleagues, particularly from Deborah Russell and Lemauga, our MP for Māngere.

We have early childhood on our marae, Minister. We have always gone down the track of reo, of support for our kids—we used to have a kōhanga reo on our marae—and so we’re always balancing what was in the best interests of our kids. So these are big political decisions, particularly in South Auckland—you know, you also attract some criticism when you make a decision on behalf of your whānau to go, some would say, the Pākehā way, in terms of early childhood. And we got there when we shut down our kōhanga reo. There’s always been this conflict in terms of kōhanga reo and early childhood.

Minister, I’m wondering in terms of that consultation process—and I accept that you would have gone down that track—how did you balance that? What sort of balancing act did they require? Because I can see through the Budget that there has been some support and assistance for kōhanga reo, but there’s a competition—our kōhanga providers have been a bit twisted through the years because they felt that they were totally ignored in the interests of early childhood. But, for us, as community providers, we have to make the best selection for our whānau and for our communities. I’m interested in that wider consultation, Minister, if you can help me there.

I’m also interested, again, in the process for whānau, particularly Māori and Pasifika whānau. As has been pointed out by colleagues, it’s all so clunky and heavy and administration-heavy, and it’ll probably come back on so many of the mothers to work out how to get the rebate. Has there been consideration given in terms of how they work in tandem with the providers? Have you been able to coordinate a strategy, say, with Whānau Ora, Minister? I note that, in that particular area, at least this Government has not reduced any funding in that area, which I’m very pleased to see.

So is there a coordinated strategy or are whānau just being left on their own to work this all out? Because our worry is that they give up and they do not access the support that is due to them. Some of our mums are just fantastic, and I’ll give them their credit. Some of our other mums are just so busy trying to get the kids their lunch and everything else that they are just unable to access the community provider and the support necessary.

So has the Government thought about a coordinated plan, working with community providers? Because this system, in terms of accessing funding, looks very clunky and very, very tough in terms of the whole administration side. I’m also worried about providers and the extra burden on them now to claim what is rightfully theirs. So just some questions for the Minister.

Dr LAWRENCE XU-NAN (Green): Thank you, Mr Chair. First, I don’t think the Minister answered my question before around the modelling of the potential increase in the cost in the early childhood education (ECE) sector. I guess, reframing it, the regulatory impact statement actually shares my concern that this has the potentiality of increasing the cost of ECE. I would like to hear some more about a commitment from the Minister, if possible, that this is not going to drive up the cost of ECE.

But what I want to really talk about is a perspective that we haven’t talked about yet, which is the interaction between the FamilyBoost tax credit and the already existing 20 hours free ECE. So one of the things that we’re looking at—and, again, I understand the intention of this FamilyBoost tax credit, which is to support and supplement the existing 20 hours a week of ECE. But, at the same time, I would like to ask the Minister—my first question is: has there been any modelling done? I do not see, in the regulatory impact statement, anything about potentially expanding ECE to longer hours beyond 20 hours, which then would require less, as we heard, compliance from parents having to do the rebate and having to do it and then only getting a tax credit quarterly after they pay it, and there’s a statement and calculators and all of those. So has it been considered to increase—simply increase—the extension of 20 hours of ECE to beyond the 20 hours?

The other thing is—and I’m looking at paragraph 10 of the regulatory impact statement on the future outlook on ECE affordability. It says, “The recent repeal of the planned extension of 20 hours ECE to 2-year-olds also reduces future support to some families to meet ECE costs.” So the second question I have here is whether the 20 hours of ECE applies to those who are aged three, four, and five, and whether the FamilyBoost here will add on top of that what they already get for 20 hours. However, what additional support will there be for families with children who are two and under other than the FamilyBoost they get, and also additional family subsidies because of the fact that they don’t have the 20 hours of ECE? So those are my two main questions.

And then my next question, again, because when we’re talking about the amount and abatement and of the $975—I’m looking at new section MH 3 subsection (2) and (3)—is: how does that $975 come about? Because, again, we have heard the impact that this has particularly to lower-income earners. And when we’re looking at something like the statistics and the census, we know, as mentioned, that Māori and Pasifika and, for me, my constituents of the Chinese communities, on average, earn less in Aotearoa than others. So, as we see here, the cost of ECE increased faster in the report—and this is from Stats NZ as well—that from June 2018 to 2022, you can see that the bottom 20 percent of salary earners face increased costs much more than all households, against the average.

So the question here would be whether there has been consideration—and this is particularly subsection (3)(b) of new section MH 3—that is being placed on the inequity that we see in our communities. We have talked about the fact that the language barrier is a real concern—and, for me, I can think of Chinese families—and I’m sure that other Chinese MPs will also echo the same sentiment that certain Chinese families who may  not be proficient in English will find it a struggle when navigating this system. On top of that, they have the additional barrier of already earning less than average of the income and having to face additional complexity but also not necessarily getting the same amount.

So the third question I have to the Minister is: has there been any sort of modelling being done in terms of balancing out some of the inequity that we’re currently seeing in our communities and particularly the ethnic communities?

SUZE REDMAYNE (Junior Whip—National): I move, That debate on this question now close.

Hon JO LUXTON (Labour): Because we aren’t having a select committee process and there isn’t the ability for people to come and submit on this particular piece of legislation, I asked the Minister a question before, and he said he addressed it, but he actually has not addressed two of the questions I asked before—the first one being: why were parents not consulted as part of this, and why was there not any work done on the fees that centres provide in order to make this bill more practical? Those were just the questions that the Minister didn’t answer, but I just wanted to get back in front of him again.

I wanted to follow on from a point that my colleague Tangi Utikere made around retrospectivity of this legislation. I want to know, if I’m a parent and I miss out on making my quarterly submission to IRD, whether I can save it up and do it the next time and whether I can, in fact, save my whole year’s worth and do it in one lump sum so I get myself quite a little pocket full of cash at the end of the day. So I really appreciate if the Minister could actually answer the questions I’ve asked.

Hon Dr DEBORAH RUSSELL (Labour): Thank you, Mr Chair. I do want to dig into some of the really technical aspects of this bill now.

So the first clause I want to look at is clause 9 of the bill, and what it does is it inserts new section GB 44B, and it’s an anti-fraud provision—that’s what that section of the Act is all about. So what it says is, basically, if someone enters into an arrangement and the purpose of that arrangement is to defeat the purpose of new Subpart MH—whatever the new Subpart MH, which is the “FamilyBoost tax credits”—then the tax credit is “reduced to the amount the Commissioner considers would have arisen had the arrangement not occurred.”

So, basically, someone could, if they want to try to get around the system, maybe submit some invoices that weren’t actually correct, or they could make some claims that weren’t correct and they could get some money, but then the commissioner could go and overturn them and get that money back. So it’s pretty standard, saying, “All right, mate, you’ve tried this one on, but we’re going to take that back.”

What I want to understand from the Minister—I mean, that just reverses the payment back out and ensures that no one gets any childcare rebate that they’re not entitled to. But will there also be a penalty attached to anyone who tries to pull a swiftie? Because I guess we’ve got a really well-known phenomenon of people who try to pull a swiftie over at the Ministry of Social Development on benefits and the like getting pretty soundly punished for that in many ways. There’s some really interesting work done by Professor Lisa Marriott showing that we are far more punitive towards benefit fraud than we are towards tax fraud. So this is an interesting one—whether it’s a benefit or a tax part.

But I would like to understand from the Minister, as the first of my technical questions, is whether there is any penalty associated with entering into an arrangement. Now, I’m not talking about where someone’s just made a mistake. You can totally get that a busy and flustered parent might accidentally load up the wrong invoice or might repeat an invoice from one quarter because they just lost track of something, because people do get busy and get flustered and things do go wrong. So that, obviously, probably couldn’t meet the level for it to be deemed an arrangement.

Arena Williams: A mum and dad with little babies.

Hon Dr DEBORAH RUSSELL: Yeah, that’s right. But there’s a circumstance where someone does deliberately set out to defeat the system and the money’s been gotten back, but is there going to be a penalty associated with it as well? I’d like to know that.

REUBEN DAVIDSON (Labour—Christchurch East): Thank you, Mr Chair, and fa‘afetai, because it is Samoan Language Week and it would be very easy for us to lose sight of that this week. But I would like to make a special shout-out to our large and proud Samoan community in Christchurch East—the electorate I am lucky enough to be the MP for.

I’m also pleased to be able to take a call on this, because there are still so many questions, I think, not just from our team here on this side but also from our community, about the approach that’s being taken here. Specifically, my questions are around a very local perspective and around a community perspective for early childhood education (ECE). The example that we have in Christchurch East is the Avonside Early Childhood Centre. Now, this is, proudly, on Woodham Road. It’s been there for 80 years. It’s one of the oldest early childhood education centres in New Zealand. It was originally called the Avonside Girls’ High Nursery School, so things have moved on. No longer do the ECE teachers there wear nurse uniforms, and no longer are they seen as babysitters. This is a vital, not-for-profit community service that allows parents to get back into the workforce, back into study, and to have a fantastic start for their children in an early childhood education environment.

The really important thing about the Avonside Early Childhood Centre is that it’s about childcare; it’s not about profit. It’s a not-for-profit. It has a board of trustees. It has a focus on accessibility for the local community, and that local community needs support for things like early childhood education. The issue with the approach that’s being taken here is that there’s a really strong administrative load put both on to the parents—and we’ve heard a lot of questions around that, because that’s not really the best approach for busy parents who are juggling a lot—but there’s also a really big administrative load that is put on to centres like the Avonside Early Childhood Centre. And, at a time when the Government is telling us through the Budget that they want to cut backroom services, what’s actually being created here is a whole new backroom role both for families but also for early childhood education centres. So we’re creating a backroom boost away from Government but into family homes and into early childhood education centres.

Carl Bates: A back-pocket boost.

REUBEN DAVIDSON: I’ve heard a member shout out “back-pocket boost”. It’s a very small back pocket. I’d love you to talk further about it, because it’s a very, very small back pocket. My question for the Minister around this approach is—

Carl Bates: Are you trying to slow down money into the back pockets of New Zealanders?

REUBEN DAVIDSON: My question for the Minister, when his colleagues will allow it to be heard, is: what was the engagement and what has the Minister’s engagement been with early childhood education centres and particularly with community-focused and not-for-profit early childhood education centres? And not only what has the Minister’s engagement been but also what was their feedback, what was the response, what was the feedback that you got from that sector, and, as a result of that feedback and as a result of a consultative approach, what support is being promised and provided for that sector to navigate what is going to be a heavy administrative load—new roles needing to be created within childhood centres where the focus really should be on providing the best start for children and for families whose parents are balancing the very busy time of returning to study or returning to work and accessing childhood care? So I look forward to the Minister’s answer to those questions.

Hon JO LUXTON (Labour): Thank you, Mr Chair. I appreciate the opportunity to make a call, and I am looking forward to, hopefully, the Minister in the chair, Simon Watts, answering my previous questions. I just wanted to follow on from a point that the Hon Dr Deborah Russell brought up. If I think back to my time in early childhood education (ECE), when we enrolled children, we had to verify that they actually existed. We had to upload information into the Early Learning Information System; we had to have evidence of birth certificates and what have you. I’m interested to know whether there is going to be security or what is actually going to be in place to stop someone—say I find out what these receipts are going to look like that centres provide and I’m going to pretend I have a child in ECE and I’m going to start claiming this rebate, I want to know what security is going to be in place. Are ECE centres and IRD’s IT systems going to be talking to each other to verify that there is an actual child here, or are parents going to have to also be expected to provide verification that there is an actual child here as well? I’m talking a bit about the whole fraud side of things, because we do know there will be people that, if they can, might like to take that opportunity. So I’m actually really interested to know what security measures will be in place to protect against that.

Hon DAVID PARKER (Labour): Thank you, Mr Chairman. Can I thank the Minister for providing me the information as to the fiscal costings of FamilyBoost. For the benefit of listeners, I couldn’t find it, because it’s not in the bill, it’s not in the explanatory note to the bill, and it’s not on the regulatory impact statement to the bill, and when I went through the summary of initiatives, I checked education and social development, but I wrongly checked Inland Revenue under “I” rather than revenue under “R”. You might call that a rookie error, but I was somewhat pleased to see that it took the Minister a minute or two to find it. In any event, it now discloses that the cost in 2024-25 is $174 million, and it goes down by about $3 or $4 million a year—$171 million, $167 million, and $165 million—in the subsequent years.

There are two questions that I have arising from that. The first is that the National Party campaigned at the time of the election that the abatement threshold for this increased subsidy for childcare costs would rise from $42,000 of family income to $50,000. Presumably, given that the National Party would’ve liked to have kept their electoral promise, they did cost what would have been the fiscal impact of lifting the abatement threshold from $42,000 to $50,000. It’s relevant both to the cost of the policy relative to what was promised at the election, but it’s also relevant to the Amendment Paper that is in the name of Arena Williams, which seeks to lift that threshold to $50,000 as per the National Party promise at the election. So I presume that that would have been costed at the time of the election. I’m interested because it seems likely that the National Party’s either going to rule out this amendment on fiscal grounds or vote against it, either of which does bring into relevance the cost of changing that abatement threshold.

The second point I would make—I have already referenced the decreasing amount of the cost of this over time. I am presuming that as a consequence, either fewer people get the benefit of FamilyBoost over the time or the amount that people get under each of those entitlements decreases over time, or a combination of both, as a consequence of inflation and inflation-related wage increases. I would like the Minister to confirm that that is in fact the case and, if that is the case, whether any consideration was given—given that we quite often hear from the National Party about the desirability of adjusting thresholds for inflation, whether any work was done on adjusting the FamilyBoost payments to make sure that, over time, it didn’t decrease by $3 million per annum.

MILES ANDERSON (National—Waitaki): I move, That debate on this question now close.

Hon Dr DEBORAH RUSSELL (Labour): Thank you, Mr Chair. I’ve still got a whole set of technical questions which we just haven’t gone into yet. What I want to understand is how the abatement works for this policy. It’s like a lot of policies. It is income tested, and, as far as I can tell, a person or family can get this childcare tax rebate. But what I want to understand is how abatement works. I want to direct the Minister’s attention to new part—so this is in clause 14 of the bill, and it will insert new section MH 3, “FamilyBoost tax credit”, where it’s looking at the entitlement to the family tax credit. Then it talks about “Amount of credit”, so up to 25 percent—well, it’s “25% of the licensed early childhood service fees payable by the person for the quarter up to a maximum credit of $975.” All right, so that’s the maximum amount a person can claim. And a “person” means, basically, family if you look further on. That’s how it works. But it could be a single person, it could be a family unit, or something like that.

But then, in new section MH 3(3), it starts to talk about the abatement amounts. It says that “If the person’s tax credit income for the quarter is greater than $35,000,”. So the way I read that is that once someone’s tax credit income—now, you have to sort of work at what that tax credit income is, and it says, as far as I can tell: “tax credit income”, if you go back to the definitions in new section MH 2, “means the amount determined under section MH 4”. So you go to new section MH 4, and the amount of the tax credit income is determined by “reportable income”. So there’s a number of questions here. First of all, it would be helpful to know from the Minister what “reportable income” is, because that determines the tax credit income. There’s quite a lot of tricky definitions in here.

So just if we could get that little bit of clarification around what “reportable income” actually is, and then that tells us what the tax credit income is. So it tells us how much income a family can earn before the tax credit itself starts to abate. So that’s the first point of clarification. I guess “reportable income”—it does say that it’s defined in the Act. Of course, we don’t have the Act here with us in the Chamber, but I’m sure that the Minister or his officials can let us know what that “reportable income” is. I’m sure it’s somewhere in Part Y of the Act, but it would be good to have that there.

So that’s the first question. Then the second question, related to this abatement, is that “tax credit income for the quarter is greater than $35,000”, so it’s for the quarter, so if we go to what the annual amount is, then, it’ll be $140,000. So if there is—you know, the way I’m reading it, if a family has income of up to $140,000, then provided they’ve spent—I can’t remember what it is per quarter—the full amount of childcare fees per quarter, they can get the full amount out. The greatest benefit for this tax rebate will be to those families who can afford to pay the childcare fees up front. And the benefit goes to families where the income is up to $140,000. Now, that doesn’t matter whether there are two income earners in the family or one income earner or so on. That’s where the benefit goes. But I would just like the Minister to talk us through how that abatement is going to work.

And, more to the point—I haven’t had time to do the maths myself—at what point, what level of family income, does the tax credit fully abate away? So what’s the maximum income a family can earn and still receive even just a few dollars of this FamilyBoost—what are we calling it?—tax credit, the childcare tax rebate? So I’d be really interested to know at what point it fully abates away. Obviously, that’s going to be quite a high-income family. So I get the point of abating it away, but just what’s the maximum income a family can earn before this new FamilyBoost tax credit fully abates away?

Hon SIMON WATTS (Minister of Revenue): Just working through some of those questions, the answer is $180,000 for the last aspect, which was the maximum income threshold. Reportable income includes salary, wages, interest, dividends, scheduled payments, and employee share incomes—and that is a defined term.

The abatement question, in regards to the National Party policy: it is something that wasn’t proceeded on, raising it from $42,000 to $50,000, but it relates to the Working for Families tax credit, not the FamilyBoost conversation that we are having at the moment.

In regards to why the numbers decrease, on page 79, the summary of initiatives, in terms of the cost, it is because there is an understanding that household incomes are expected to increase in time, and those aspects will always be subject to review by Government in regards to its broader tax policy.

Dr LAWRENCE XU-NAN (Green): Thank you, Mr Chair. I have more of a question of clarification. This is with regard to a section that we haven’t discussed yet, and this is clause 14 inserting new Subpart MH, new section MH 4(5) and (6). So, for new subsection (5), it talks about the question of “If the person has a spouse, civil union partner, or de facto partner”. This is something that is going to be really crucial when we’re looking at something that is retrospective in nature of people getting a tax credit quarterly. So, in this case, it says that the personal tax income takes into consideration the person’s tax credit income and the tax credit income of their partner, for the quarter.

But I have a question of what happens if the couple separates. So, luckily, this was mentioned in subsection (6), which says, “Subsection (5)”—which is the previous subsection—“does not apply for a quarter if the person is separated from their partner and does not have a new partner at the end of that quarter.” So my question here is: when subsection (6) is triggered, does it encompass the entire duration of the quarter, as indicated in subsection (5), or does subsection (6) only consider pro rata the period of time where the main person with the tax credit income no longer has a partner? I think this is a really important point of clarification for, in this case—in more cases or not, as we see in the regulatory impact statement—it affects women and, particularly, solo mothers with young children. So I think that clarification of whether subsection (6) encompasses the entire quarter or if it’s going to be pro rata when the partner is separated is going to be a really important clarification for the people of Aotearoa.

So if the Minister wouldn’t mind just clarifying whether subsection (6) applies to the entire quarter or just for the period that the person no longer has a partner. That would be really good if he could answer that.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Mr Chair. I have eight questions for the Minister of Revenue, straight questions that we haven’t dealt with yet. I’ve had one call in this debate to speak to my amendment to Part 2. I’ll give the Minister a heads-up about what it is. It’s to clause 3. It would include a new clause 3A that amends section MD 13 of the Income Tax Act. That clause, just for the Minister’s information, is about the family tax credit abatement rate. In my colleague the Hon Dr Deborah Russell’s contribution, she was talking about the abatement for the FamilyBoost package. This contribution, Minister, is about the family tax credit abatement rate, which my amendment seeks to change.

All right, to the eight questions that I have, which haven’t been answered yet, the first is about the fiscal cost of the lack of a change to the abatement rate from $42,000 to $50,000. This was something that was costed into the National Party’s provisional Budget. It was in their operating allowance at the time prior to the introduction of this bill. So the House has had only two days to consider the fiscal impact of not doing the abatement rate. I’d like the Minister to give me the fiscal cost of that change and the savings that have resulted from that, so that we can understand the impact on low-income families.

The second question I have is: how many households would have benefited from the family tax credit had the change to the abatement rate been made? A change from $42,000 to $50,000 represents perhaps 10,000 homes who are now missing out on the family tax credit because that decision has not been taken.

The third question I have is: which households? Can the Minister give the committee an understanding of what kind of households are missing out on the change that would have seen them eligible for the family tax credit who, because of the decisions not to include a change to the abatement rate in Part 2 of the bill, will not be receiving that? Which households are they? What kind of income profiles do they have? And are they exactly the low-income families that the Minister has talked about Part 1 most affecting?

The fourth question is: how is it being offset for them? The Minister has talked about low-income families being the primary beneficiaries of those changes to the three categories of the lowest-wage earners in his changes to Part 2—I believe it was the clause 7 changes to Schedule 1 of the Income Tax Act. I want to understand how the Minister has gone about offsetting the loss of tax benefits by not increasing the family tax credit abatement rate that will now apply to these low-income households—if, indeed, it is low-income households, because the Minister hasn’t answered my previous questions in the call about how this will affect the tax spread and the tax efficiency outcomes that he surely wants to see from his decisions in this bill.

The next question I have is that he did speak about, in his answer to my earlier questions, there being a number of trade-offs being made here, and that the abatement not being made—which would have been the bigger change to his tax package—was about trade-offs and fiscal considerations that were taken by the coalition Government. What I want to understand is: given that it was in the National Party’s operating allowance that they campaigned on, that doesn’t really answer the question, because, if it was in the operating allowance, what has changed in the operating allowance now not to include it? We’re not talking about taking on further debt; we’re talking about policy decisions which affect exactly the same people which the Minister is trying to get to in his changes in this bill.

So the fifth question I have for the Minister—number five—is: is interest deductibility the trade-off that he is talking about? Is it because that change cost hundreds of millions of dollars more than it did in the operating allowance that the National Party was discussing at the election time? Is that the trade-off that he was talking about in his previous answer to my question?

Question number six: is it the gambling tax? Is it that the gambling tax does not raise what was expected, and is that trade-off that he is talking about in his answer to my question?

The next question is: is it overseas buyers? Are overseas buyers and the failure to be able to deliver on that campaign promise the reason why the operating allowance is different and why this abatement hasn’t been able to go ahead?

The eighth question I’d like the Minister to give us an answer to in this committee is: because of those three measures—questions five, six, and seven—is that why low-income families, who the Minister is helping in Part 1 of the bill, will not be receiving that benefit in Part 2 of the bill that they would have received?

CHAIRPERSON (Greg O’Connor): I’m going to indicate that I’m going to go back to Lawrence Xu-Nan—I noticed when you were asking your questions, the Minister in the chair at the time was on a cellphone for the whole time. So while the Minister’s fully entitled to be out of the Chamber, I would expect the Minister in the chair to show a little more attention to the Chair while he’s in that position. So, Lawrence Xu-Nan, we’ll go back to you for your speech. And, Arena Williams, if you would like some of those earlier questions, you’re welcome to them as well. Lawrence Xu-Nan.

Dr LAWRENCE XU-NAN (Green): Thank you so much, Mr Chair. I will keep this brief because—if I can find the section. This is around new section MH 4—I have lost it. This is around subsections (5) and (6) of new section MH 4, in new Subpart MH, inserted by clause 14. The question I have to the Minister is: if the Minister wouldn’t mind providing a clarification of subsection (7) of new section MH 4, where it says that subsection (5) does not apply if the main income tax holder has a partner and has split up and they no longer have a new partner by the end of that quarter. So clarification is needed as to whether it meant that that main partner would be considered single for the entire duration of that quarter—because it says “Subsection (5) does not apply”—or if it’s going to be pro rata, as in they will only be counting depending on the date of separation or the precise month. So I think that clarification will be quite helpful.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Mr Chair. My question about the fiscal cost of the abatement is something that I acknowledge the Minister has been asked a couple of times and he hasn’t been able to answer, so what I might do is clarify why that is important while he considers with his officials.

So this question is because there are two changes being made to the family tax credit regime that were being considered only two days ago, before the introduction of this bill. One was increasing the rate to $25 a week. That has been done in this bill—that is a good change. That is a change we can all support because it means that low-income families are getting $25 extra a week in the hand through the family tax credit and that is both an efficient way to distribute that money and it is a targeted way that goes to the people who need it.

But the second change that was being considered prior to the introduction of this bill was the bigger change. It was the bigger fiscal impact that affected more people—we’re talking in the number of tens of thousands of people. That hasn’t been done. That was the change to the abatement threshold, and it was from $42,000 to $50,000. So the reason I’m asking the Minister is about the fiscal cost of that, which is not being done. Then I want him to help us understand how big that is for the families who have been affected by the decision to not make that change. I ask it because I’ll bring the Minister back to Part 2 of my Amendment Paper.

James Meager: Are we still on Part 2? Been here for a while.

Carl Bates: Are we on Part 2?

ARENA WILLIAMS: It’s on the Table for the members who are a bit confused about where we are—I hear their interjections.

James Meager: Oh, what clause?

ARENA WILLIAMS: It’s Part 2, clause 3A on my Amendment Paper. It inserts a new clause 3A which reads, “ND 13 Calculation of family credit abatement.”

James Meager: Not Part 2; Part 2 is clause 8.

ARENA WILLIAMS: I think the member is a bit confused because he might be looking at the Minister’s Amendment Paper. My paper seeks to amend the Minister’s amendment and so where we are is we’re amending, in the Minister’s Amendment Paper, the Income Tax Act 2007. This Amendment Paper would seek to insert a change to that principal Act, the Income Tax Act 2007. The reason it is here is this part is the only part in which I could amend it for the Minister because he promised to do it before we got here with this bill.

CHAIRPERSON (Greg O’Connor): Just before—for the Hansard—I was not referring to this Minister in the chair being on his cell phone. I want to clarify that you’ve been very attentive, Minister Watts.

Hon SIMON WATTS (Minister of Revenue): Thank you, Mr Chair. The member Arena Williams doesn’t have an Amendment Paper on the Table, so I’m not sure what her contribution was referring to. But in regards to the question in regards to a circumstance where there may be a separation during the quarter, there is no appropriate pro rata or apportionment process. The decision around eligibility is a point-in-time decision at the end of the quarter, and so, quite simply, that’s how that process would work in regards to that question.

CARL BATES (National—Whanganui): I move, That debate on this question now close.

TANGI UTIKERE (Labour—Palmerston North): Kia orana. Thank you, Mr Chair. I’m yet to receive a response from the Minister to a question that I put to him. It’s largely framed around the support and how Pacific communities as a family unit can function. So I would be very interested for the Minister to at least address the question if he’s not able to provide a fulsome response. Just to remind him, the data indicates that just under a quarter—around 24 percent, Minister—of children are looked after or cared for in informal arrangements that involve grandparents or potentially extended whānau or anau. Now, in a Pacific context, that could, again, mean an aunt, an uncle, an older sibling, or perhaps someone much older, and so I am interested in hearing an answer from the Minister, given that we are an urgency, given that we have not had an opportunity to put this in front of the very people who would be impacted by this potential change.

I referenced the change in new section MH 3(5), inserted by clause 14, because my read of that section indicates that those that might fall within that Pasifika context and the definition of that would not necessarily be eligible, even though they would be seen or perceived as the primary person that is responsible for the children, even though many of them will be 65 or over and what they would be getting in terms of proposed additional support is $2.25 a week. I’m interested to have a response from the Minister around that.

I’m also interested in the Minister commenting on, or at least addressing, what has been raised by my colleague Dr Russell, and that’s around the fraud aspect. So I think this is really important because it is a new process, it is a new opportunity, and I’d like to hear from the Minister, please: where is the integrity within the process, particularly in the context of a Budget that potentially provides less for prosecution and more for enforcement? So where there might be family units and others that may find it difficult to engage with the administration requirements and the criteria of getting this in on a quarterly basis—or, indeed, whether it’s the early childhood education (ECE) provider that may be held up and not able to, so it’s not actually the fault of the parent or the family unit to get the information, but the additional responsibilities on the ECE provider—where is the integrity in the process in terms of addressing the potential for fraud so early on in this process?

ARENA WILLIAMS (Labour—Manurewa): Thank you, Mr Chair. I want to give the Minister an opportunity to answer at least one of the eight questions I have put to him about what is an incredibly important part of this part. This is the only part where we can discuss a promise that the National Party campaigned on and costed in, an operating allowance that we could have relied upon until just two days ago, an operating allowance which included a change to the family tax credit abatement threshold. That would have been the bigger change; it’s not in here. We don’t know the fiscal cost of it. We haven’t been told how many people that affects. And so the Opposition is struggling to be able to decode why the Minister wouldn’t accept my amendment to Part 2.

The amendment to Part 2—the only answer that the Minister gave me then was that he couldn’t tell where my Amendment Paper was. I hope the Clerk can help him find the amendment that was tabled. One was tabled at 7.20 p.m. last night, and I believe the other one was tabled at about 1.20 p.m. yesterday. So the Minister and his officials have had time to consider this. You know why they’ve also had time to consider this? Because it was fully costed in the National Party’s fiscal plan. It is in their operating allowance, and it wasn’t there until two days ago.

Why can’t the Minister tell me what the fiscal cost of the amendment on the Table is today when he thought there was value in introducing it, because he campaigned on it? Why can the Minister in the chair not answer one of the eight questions I have put to him about this amendment? Why isn’t the Minister considering it? Is it the case that he has told the backbenchers on that side that he will be voting for my amendment? Because this amendment is in line with his values—it’s not what I would do, but it is what he would do. It is what he told the electorate he would do. So let me help you, Minister.

FRANCISCO HERNANDEZ (Green): Just a very quick question, a very quick contribution. I’m curious to hear the Minister’s explanation about why a four-year period was picked instead of any other time frame. That seems to be quite a short time frame. This is new section 41C, subsections (9) and (10). They refer to the four-year period in both (9) and (10), and so I’m just curious what the rationale was for picking a four-year period. I want to also know if other kinds of year periods were explored and what the kind of shake-up of that was. Thank you.

SUZE REDMAYNE (Junior Whip—National): I move, That debate on this question now close.

Hon Dr DEBORAH RUSSELL (Labour): Thank you, Mr Chair. I want to come back to a point I raised earlier around the abatement rates, and particularly—

James Meager: Oh, has it already been covered?

Hon Dr DEBORAH RUSSELL: —how quickly—take a call; take a call—the tax credit abates. Now, I hadn’t done the math, so I hadn’t worked out exactly how much a family could earn before the tax credit ran out.

Carl Bates: So you want people to get tax cuts?

Hon Dr DEBORAH RUSSELL: The Minister—take a call, Mr Bates; take a call.

Carl Bates: Do you want people to get tax cuts? Are you encouraging us to give more tax cuts?

Hon Dr DEBORAH RUSSELL: Mr Bates, stand up and take a call instead of shouting across the Chamber. I am going to carry on with my allocated time, but I notice that the members are very engaged. If they would take a call, that would be fantastic.

Getting back to these abatement rates. Fortunately, either the Minister of Revenue himself—because I know he is quick of mind—or perhaps his officials were able to tell us that the tax credit fully abated away at $180,000. So that means that the maximum amount that can be received—a person earning $140,000 can claim the maximum amount, but then, after that, it abates away at whatever the rate is, until, at $180,000, the person or the family can’t get any more of the tax credit. So that’s quite a steep abatement rate across $40,000 of income. It might be $40,000 of family income, or it might be that $40,000 split between the two incomes—whatever it works out to be.

But my question is to do with whether any modelling was done by the Minister’s officials—and I’m assuming he would have asked them to do this, because it’s quite important—around EMTRs, effective marginal tax rates. Now, here’s the thing. If someone is earning, say, $150,000—so their marginal tax rate at that level is 33 percent—but if they have a student loan as well, then there’ll be another 12c going on to their effective marginal tax rate. So their effective marginal tax rate would be up to 45 percent. Then, I think, at that stage, they run out of family tax credits and things like that. So that’s not going to affect the EMTRs. But if the Minister could clarify that for me.

But what I’d like to know—and it’s a pretty simple example to work out mathematically, and I’m sure the officials can do it for them fairly quickly. Let’s assume we’ve got someone who’s got an income of $150,000—just one income in the household; let’s assume a spouse who is fully occupied in other activities or may be a sole parent or whatever. So their marginal tax rate is 33 percent under the new tax scale as well, and maybe they have a student loan of 12 percent, so our effective marginal tax rate is up to 45 percent. What is that effective marginal tax rate increased to, thanks to the abatement of this childcare tax rebate? So that’s the first question—just exactly what that EMTR is. And I’d like to know if there’s any modelling done around that. I’m assuming there was; or, if not, I actually know that those officials will be able to come up with that number fairly quickly for us.

But here’s the other thing: I just want to know what analysis was done on the effect of that increased EMTR, on whether or not a person is liable to go and look for more work or look for other income. Every time we have a look at EMTRs, we know that it impacts a whole series of other decisions that people make. So I wonder if the Minister could just add that little bit of detail around those abatement rates. It might be in the regulatory impact statement—I’m sorry, given the speed with which we’ve had to deal with all that, I haven’t seen it. But I would like to understand the effect of the abatement on the effect of marginal tax rates. I think it’s a fairly important one to understand, as we understand the impact of this policy on ordinary New Zealanders.

RACHEL BOYACK (Labour—Nelson): Thank you, Mr Chair. I’m delighted to be able to take my first call on the Taxation (Budget Measures) Bill, and I do appreciate, Mr Chair, your providing me with that opportunity to take this call.

I wanted to begin just by reminding the committee that as we are in urgency, we do expect to have answers to those questions that colleagues have put forward, and I want to touch quickly on a couple of the questions and contributions from my colleagues, because, obviously, we don’t have the opportunity as members to engage through that select committee process. So I do just want to begin my call by really asking the Minister to engage and to respond to those questions.

The first was around the contribution from my colleague Dr Deborah Russell—which Tangi Utikere touched on—about the analysis around fraud, and I just don’t believe we’ve had a response yet from the Minister. So I’m looking forward to the Minister, hopefully, taking a call—are you going to take a call? Great!

Hon SIMON WATTS (Minister of Revenue): Thank you very much. I’ll take a call in response to those questions. So in regards to the abatement rate and the effective marginal tax rates, the modelling will depend on the ability to get the respective data from the relevant players, including the early childhood education sector. That’s not information that the IRD currently holds, so that modelling—for the member’s question—has not been undertaken, but as and when that data starts to flow through, we’ll be able to do it.

There was a question before around the four-year period, in terms of why it’s four years. Four years is a standard period in regards to the way in which—time-barred for Inland Revenue’s products. So that’s the basis for those two.

RYAN HAMILTON (National—Hamilton East): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

CHAIRPERSON (Greg O’Connor): The question is that Arena Williams’ tabled amendments to replace section MD 13(3)(i) and (ii) be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendments not agreed to.

CHAIRPERSON (Greg O’Connor): The question is that Arena Williams’ tabled amendments to replace section MD 13(3) and delete clauses 12, 14 to 16, and 18 be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendments not agreed to.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Part 2 agreed to.

Part 3 Income Tax Act 2007 and Tax Administration Act 1994 amendments commencing 31July2024

  

CHAIRPERSON (Greg O’Connor): Members, we come now to the debate on Part 3, which is the debate on clauses 25 to 32, “Income Tax Act 2007 and Tax Administration Act 1994 amendments commencing 31 July 2024”. The question is that Part 3 stand part.

Hon Dr DEBORAH RUSSELL (Labour): Thank you, Mr Chair. I appreciate the opportunity to take a call on this. Part 3 looks incredibly dull, and I’m sure the Minister would agree that it looks pretty dull too. It really is a series of clauses which replace one number with another. For example, clause 26 amends section LC 13 of the Income Tax Act, and it just says, “In section LC 13(5), replace “$44,000” with “$66,000”. In fact, all the ongoing clauses pretty much look like that. So it’s a whole series of replacing one number with another number.

But, however dull it looks, it’s actually kind of important, because what it’s doing—and I had hoped the Minister would explain this himself, but perhaps not—is it’s setting the new amounts for independent earner tax credit, the in-work tax credit, and the minimum family tax credit. And then, following on from that, clause 29 amends an amount in Schedule 1. Part 3 then goes on to a whole lot of stuff that’s in the Income Tax Act.

Then there’s a whole lot of stuff amending various sections in the Tax Administration Act as well. But hiding in between these seemingly dull-looking changes, which do just substitute one for another, are some pretty important policy decisions that the Government has made. This will be one of our few opportunities to debate those policy decisions as to why they chose particular amounts. So I’m just going to go to, first of all, the independent earner tax credit, and in section LC 13(5) we’re replacing $44,000 with $66,000.

Now, that is a pretty technical change, but I think that for the benefit of the committee and for the benefit of people watching and for the benefit of people who actually want to understand what is going on with our Income Tax Act, it would be helpful if the Minister could explain exactly what that clause does and why that amount of $66,000 has been chosen. There will be some policy thinking behind it. I would like to have an explanation of that policy thinking. So, Minister, it would be great if you could just explain that clause to us.

RACHEL BOYACK (Labour—Nelson): Thank you, Mr Chair. Look, it’s a great opportunity to take a short call on the Taxation (Budget Measures) Bill.

Hon Member: A short call.

RACHEL BOYACK: It will be a short call, but it would be wonderful to hear from some members opposite about the questions that they might have for the Minister. I mean, they wouldn’t have had an opportunity, I don’t think, to take this through their caucus. I will just repeat the comments that I made at the beginning of my call on Part 2, which was that the reason that we do put these questions forward for the Minister—and the Minister is obviously able to seek guidance from his officials—is because we don’t get the opportunity to have the full scrutiny through that select committee process. So this is an important part of the House’s role to scrutinise this bill. Now, one of the things that I’m quite interested in is the overlap that we will see between the tax credits in terms of the threshold—the minimum family tax credit—and to ensure that the Minister can guarantee that every family will be better off regardless of where they fit in the margins in terms of the interaction between those different components of the tax system for families. And so the question, in particular, is: if a taxpayer would receive more from the independent earner tax credit than the in-work tax credit, because obviously we have different parts of the system that interact, the IRD would actually proactively go out and change it for them or, at least, advise.

One of the things we’re mindful of with how the IRD operates—and there were some really good changes brought in under our Government to allow the IRD to be more proactive with people when perhaps they were on the wrong tax rate or if they needed to get a special tax rate. One of the things is that regular interaction that occurs between the IRD and the other systems that are in place and whether there will be a system devised in this situation so that when the IRD identifies those families who have an interaction between different parts of the tax system that means they might actually be collecting the wrong benefits through that tax system, how do they know that? And is there advice that’s then provided to those families so that they can update their tax records and interact with the IRD in order to make those changes?

So, as I said at the beginning of my call, we do hope that the Minister will be able to engage in, as Dr Deborah Russell has said, a bit of a dry section of the bill, but it is actually important that we hear from the Minister. He has his officials here to advise him so that he can provide that advice to the committee—just reminding the Minister, and the committee as well, that the discussions that are had on the Hansard in the House can be very important for interpretative matters, perhaps in the courts or in times when clarity is sought around what was the intent of the Minister and what was the intent of the House when this particular piece of legislation was put forward? So I’d be really encouraged to hear from the Minister now. Thank you.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Mr Chair. Part 3 is very routine and standard in nature and, I think, as one of the prior members has noted, a little bit dull. I wouldn’t quite go as far as that; tax legislation is never dull, but there is very little that one can say about this section. It is simply effecting the changes in terms of the changes in rates. In regards to the question around policy, around why $66,000 versus any other number, those are policy decisions that the coalition Government have landed upon, and there’s not much further that I can say other than that these are the rates that we’ve landed on, and this section effects those changes.

FRANCISCO HERNANDEZ (Green): Thank you, Mr Chair. I’m taking a short call, quoting some of the regulatory impact statement (RIS) that’s been published about Part 3 and some of the changes around the tax brackets. I just want to quote a section of it because I’m curious to see the interpretation about the effective marginal tax rate (EMTR).

The RIS, Annex 1, page 18, says that “The personal income tax threshold changes and extending the income range of the Independent Earner Tax Credit reduce EMTRs for 335,000 people (positive impact on work incentives) and increase EMTRs for 85,000 people (negative impact on work incentives). Adding the proposed family based tax credit changes (the In-Work Tax Credit and FamilyBoost) increases the EMTRs for a further 45,000 people (negative impact on work incentives). These people are in coupled families with children, and are spread across the first 4 income tax bands ($0 to $180,000). Modelling did not indicate an increase in EMTRs for sole parents.”

I’m curious about the 130,000 people who have been negatively affected by the changes in EMTRs. Does the Minister in the chair have specific analysis about who the people who have been negatively affected are? Like, is there a specific breakdown in terms of, perhaps, income quintiles or specific breakdowns in terms of ethnicities or even specific breakdowns in terms of geographic region or electorates, for example? Thank you.

Hon Dr DEBORAH RUSSELL (Labour): Thank you, Mr Chair. That is an excellent series of questions that has been raised by my colleague in the Green Party, having a look at the effective marginal tax rates because there’s quite an interaction between—

James Meager: Oh, it’s a love-in. He’s well educated, that’s why. Otago graduate.

Hon Dr DEBORAH RUSSELL: I’m willing to yield the floor if the member would like to make a call.

CARL BATES (National—Whanganui): I move, That debate on this question now close.

Hon Dr DEBORAH RUSSELL (Labour): Point of order, Mr Chair. Mr Chair, my understanding is that when a member yields the floor in order for another member to make a contribution, that call may not be used to call for the end of the debate.

CHAIRPERSON (Greg O’Connor): I’m not familiar with that rule, but, Mr Bates, there was an indication that you were taking a call, so—[Interruption] No, no. You’re bordering on an abuse of process there. Does the member wish to take a call on the bill, or was he going to take a closure motion?

CARL BATES (National—Whanganui): Mr Chair, my understanding was that she was offering me the floor to make a call, and so I put the closure motion.

CHAIRPERSON (Greg O’Connor): All right, OK. Well, now, I think that’s probably clarified something now—that members on my right, if they do want a genuine call, they’re obviously welcome to it but it may well be through the nature that they’ll need to indicate to the Chair that they’re looking for a call on the bill. Otherwise, there is the assumption, given we know the problem of too much assumption, is that it will be a closure motion. So we will resume now.

TOM RUTHERFORD (National—Bay of Plenty): Point of order. Thank you, Mr Chair. I just want to seek some clarity there. So we need to differentiate on this side between whether we’re rising to speak on the bill or whether we are going to be putting forward a closure motion. That’s the ruling you have just made there.

CHAIRPERSON (Greg O’Connor): No, no; what I said was the assumption will be that members on my right, at this stage of the debate, rising as they have, will be taking a closure motion. However, it is only an assumption—there is no ruling—but I would always welcome a call on the bill, to my right. We’re very early on in the debate on this part of the bill. So it may well be that a call at this stage may well be a call on the bill. So it would be useful just to indicate to the Chair—myself and my fellow Chairs—that you are seeking a call on the bill. That might just help the committee act more smoothly.

TOM RUTHERFORD (National—Bay of Plenty): OK, and just speaking to the point of order, when the Hon Deborah Russell took her seat, she cited that there was a Standing Order or Speaker’s ruling that said if a member in this House yielded the call, they would not be able to take the closure motion. Could you please let me know what that is?

CHAIRPERSON (Greg O’Connor): As I indicated, that is not a rule that immediately leaps to my mind. I’m not saying it doesn’t exist, and I’ll put the Clerk’s Office to work now, seeing if such an order does actually exist.

Hon KIERAN McANULTY (Labour): Speaking to the point of order. Thank you very much, Mr Chair. As I understand it, the rules around yielding are quite restrictive. It’s an unusual procedure in the House, but it is prescribed in the Standing Orders and Speakers’ rulings: a member has the ability to yield time within their allocated speaking time if another member seeks that that is their intention. When yielding the time, that time is to be used to seek clarification from the speaker—the person speaking, that is—as to a point they are making so the House can better understand what they’re talking about. It is not to be used as an opportunity to make a debating point, a political point, or, in, this case here, a closure motion. So when the Hon Dr Deborah Russell offered to yield and gave up her time, it was in the hope that members on the other side would contribute to the debate, not use that opportunity to try and close the debate down.

CHAIRPERSON (Greg O’Connor): All right, and thank you for that contribution. As I said, I’m vaguely aware there is such a thing. I don’t know the detail of that yielding—it certainly sounds like the member might know a little more than me—but I’m certainly going to take some advice on that so that I can advise the committee on the motion, because having now come to the fore, I’m sure it will be something to the minds of all the members present. So we’ll now resume with the Hon Deborah Russell, and I’ll treat this as a continuation of that call.

Hon Dr DEBORAH RUSSELL (Labour): Thank you, Mr Chair. I think that’s appropriate, Mr Chair, and I thank you for your ruling in that matter. It is a shame—

James Meager: Stay standing.

Hon Dr DEBORAH RUSSELL: You’re welcome to take a call. Look, I want to carry on with discussing these effective marginal tax rates (EMTRs), in particular, following on from what my colleague Mr Hernandez was talking about. I want to draw the Minister’s attention to page 10 of the regulatory impact statement (RIS). It’s got something quite alarming in there. So this is the regulatory impact statement on the $25 per week increase, the in-work tax credit—it’s really all the adjustments to the Working for Families tax credits. So it’s not just the in-work tax credit; it’s also the minimum tax credit and the independent earner tax credit and so on. So they all kind of fit together. But there’s a really difficult overlap between the minimum family tax credit and the in-work tax credit and all the various sorts of tax credits that are available.

In particular, I want to look at the issue around the impending overlap of the minimum family tax credit threshold and the Working for Families abatement threshold. Now, the minimum family tax credit is a really small tax credit. It only applies to a few people—or a few families. But the minimum tax credit is designed to ensure that between the operations of benefits from the Ministry of Social Development and tax credits and income earning and the complicated interweaving of all those different measures we have in place, it tops up a family’s income to a minimum level to ensure that a family who is in work—as in “work” as defined—actually ends up a little bit better off, even if only a tiny little bit better off, than a family on benefit. So that’s the idea of the minimum family tax credit. But it is continuing to go up as benefits increase because of the operation of wage increases or Consumers Price Index increases, because that’s how we set our benefits each year. That means that the minimum family tax credit threshold is going to have to increase over time. So that’s one aspect of it. But then over time, all these Working for Families tax credits, they abate. So once you earn a certain level of income, those Working for Families tax credits start to abate.

Here’s the problem—and I’m going to need to seek a little bit more time to explain this, Mr Chair, but sooner or later, that minimum family tax credit threshold is going to cross over the Working for Families abatement threshold. It’s set out really clearly in the RIS. It says that “As the [minimum family tax credit] threshold increases annually, it is forecasted that on 1 April 2027 it will overlap with the [Working for Families] abatement threshold.” Mr Chair, I’d just like to carry on with this call if I may, because this call is—I’ve just got to get through the problem. So if I can just carry on—thank you, Mr Chair. This means that Working for Families customers will face effective marginal tax rates of over 100 percent, so an EMTR—an effective marginal tax rate—of over 100 percent. So, in layperson’s terms, what that means is that if that family earns an extra dollar, then $1.10 might be taken off them in abatements. All right, so that’s kind of worrying. So when the EMTRs go over 100 percent, there is then no—well, why would you do the extra hour of work if more is going to be taken off you than you get paid for the work in the first place?

So what it means is—as the regulatory impact statement goes on to say—that “[minimum family tax credit] recipients who are some of the lowest income working families would face decreases in their income as they work additional hours.” So, as a result of the changes that are going through in this tax bill, we are now facing this very real problem at 1 April 2027. So it just means that the policy intent, and it’s set out in the regulatory impact statement, is they would owe—you know, they conflict. On the one hand, we’re trying to encourage low-income families into employment; on the other hand, we’re going to abate away every single dollar they earn. The problem is going to come about because of the way that tax credits have been changed about in this bill. Minister, it’s a real problem. I’d like to hear some of your thinking on it.

CHAIRPERSON (Greg O’Connor): I’m going to call the honourable Minister, but just before I do that, if you would indulge me, please, Minister, I’ll just make a comment in relation to the discussion we’ve just had on yielding. When a member invites a member on the opposite side to yield, or offers to yield, it is actually part of that member’s call. That is why that precludes a member from taking a closure motion during the middle of a call. So if members intend to yield, it would be useful to actually use the word “yield”. It would just be useful, because then we know.

As far as the members on my right go—there was a question, in relation to the debate, about whether the fact he’s used a closure motion precluded him from another closure motion—that is not the case. It was only in the case of that particular call. So, Mr Bates, you’re welcome to continue your vigorous efforts at closure motions.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Mr Chair. In regards to the member’s question in regards to the issue that has been highlighted in terms of the overlap between the minimum family tax credit threshold and the general Working for Families tax credit abatement threshold, look, this is an aspect of—technical in nature, obviously. It is an element which will, in terms of scenario, come into play, forecasted by IRD, on 1 April 2027. That overlap consideration is an issue and it is an issue that I’m aware of, obviously. I have asked officials to provide us with some advice later this year about how we look to address it. So that is an ongoing aspect and it is due to the uniqueness of some of the changes.

There was another question also in regards to tax codes and how IRD identifies the appropriate tax codes. IRD will use the appropriate and existing systems and processes in order to determine those tax codes. Obviously, if IRD is aware that employees may be using the wrong code, etc., which occurs occasionally, then it will be up for the employees to inform them. This is a standard practice, nothing sort of out of the ordinary in regards to this restoration to this bill.

Hon GINNY ANDERSEN (Labour): Thank you very much, Madam Chair. Thank you for the opportunity to take a call. In terms of the amendments that this bill is making to the independent earner tax credit and also the in-work tax credit, I have a couple of questions for the Minister of Revenue, and it really comes down to how people are going to figure out exactly what they’re entitled to and how they know that those corrections have been done accurately, and maybe the Minister might like to shine some light on this.

When we’re going through the bill’s commentary that’s been prepared by the Inland Revenue Department, it gives some examples of how composite calculations for the 2024-25 tax year can be analysed, and it reads kind of like a sixth-form maths problem. You’ve got someone called Elizabeth, and they’ve got how much the abatement under the current settings is, which is 13c per $1,000. Then you’ve got the calculation of the number of days that the current settings apply, which, in this example, is 121, and then you’ve got the amount of the abatement under the proposed settings, which is 13c times zero dollars.

When you’re trying to calculate the differences between how those settings have changed, it is not really that straightforward for members of the public to ascertain what, in fact, they’re entitled to. If you’re a salary earner who’s getting paid, then a lot of that is already done on your behalf, but if you are, in fact, generating your own income and if you are having to also pay staff, there seems to be quite a complicated sort of formula in terms of trying to establish what the number of days are that you are entitled to, the periods that it applies to, and how that increases.

In particular, what I would really like to know is what the role of the IRD is in this to assist people to understand what they are entitled to, and if a taxpayer would receive more from the independent tax earner credit—which I’ve just referred to—than the in-work tax credit because of these changes, what the role of the IRD is to proactively change it for them. I don’t think it is made clear that it is incumbent upon the taxpayer to do those calculations and to ascertain the interactions between the independent earner tax credit and the in-work tax credit, and also I think that that sort of bleeds into the minimum family tax credit.

So, while people can go online and plug their details into the calculator, I actually think that there’s additional information that people out there who have figured out that they get maybe $80 a fortnight—how does that actually work for them, and what do they do to ensure that they get that money coming back to them? I think, to be honest, that there’s a high level of suspicion sometimes when it is said that you’re going to be getting this extra money, but what happens if those calculations are being done on your behalf, and what if those calculations aren’t quite accurate? What is the recourse for those people who believe they are entitled to a greater share of tax relief, but who haven’t managed to realise this increase in their back pockets?

I think, just from looking at how people calculate it through this document, it seems incredibly convoluted in terms of establishing the process, particularly in this transitional period of changing where the thresholds are, and the interactions that that makes for people. So I would really appreciate it, on behalf of the people who have contacted me since the Budget has been announced—for those people in our own areas who are interested to know how they would access this—how it works for those people who are not necessarily salary earners, but who are generating their income either from their own business or from a range of other sources. If the Minister is able to address some of those questions, I’d be really happy to hear that.

KAHURANGI CARTER (Green): Thank you, Madam Chair, for the opportunity to speak on this Taxation (Budget Measures) Bill. We are looking at Part 3, “Income Tax Act 2007 and Tax Administration Act 1994 amendments commencing 31 July 2024”. Now, looking at clause 27, “Section MD 10 amended (Calculation of in-work tax credit)”, I want to draw from the regulatory impact statement on the $25 per week increase to the in-work tax credit (IWTC), particularly around the impact on child poverty, and the increase of the IWTC by $25 per week. I’m really interested to understand what ongoing work there will be to model what hasn’t been done yet, which is the independent model on the other tax packages due to those time constraints.

It says that “the tax package may slightly reduce moving-line BHC50 child poverty, since the poverty line for this measure is set at 50% of the median household income.” Well, when we’re talking about child poverty in Aotearoa New Zealand, as the child spokesperson for the Greens, I go back to Jonathon Boston’s quote about raising tamariki in New Zealand, which was that above all, New Zealand should be a great place for raising children. Now, for some children in New Zealand, it’s far from a great place. Their reality consists of living in cold, damp, overcrowded homes, moving homes frequently, experiencing hunger, suffering Third World diseases like rheumatic fever, and missing out on many things which the majority of children take for granted.

Furthermore, looking at the table on page 21 of the regulatory impact statement, where it says that there will be an average weekly increase of $16.97 for 170,000 households, I want to understand what $16.97 actually achieves. Well, if we’re talking about it at the flaxroots for families, that’s about a block of cheese and 500 grams of butter. So how is that really going to help when we’ve got more children going into poverty?

Furthermore, on page 22, what I’m really keen to understand is how these tax credits can actually help lift children out of poverty, because we can actually be the best place in the world for children to grow up. New Zealand can achieve that, but when we’re looking at the table on page 22, the analysis is saying that the impact of this wider tax package is very low. The impact on child poverty reduction from the increase of $25 per week has not been modelled independently of other tax package changes.

We really want to focus on lifting children out of poverty in New Zealand, and I really want to understand when that independent review on how this tax package will actually affect children—particularly children in poverty in New Zealand—when this table itself says that the impact on child poverty is going to be low. Thank you.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. Obviously, the implications of reducing child poverty are a significant priority for this coalition Government, and the Budget that we released yesterday, by reducing the cost of living pressures for low and medium wage households, will aid in supporting that.

In respect of the specific question around what are the implications that the changes to personal income tax, the IETC, the IWTC, and FamilyBoost will have—now, all of those acronyms are, basically, the different changes that have been made as part of this tax bill—there is an estimation that child poverty will reduce by 17,000 children, plus or minus 6,000 by the 2027 tax year, and there is a margin of error on that, using standardised measures. That is statistically significant. If you refer to a status quo model, then the expectation is that without doing any of the changes that this Government is driving through, then child poverty, potentially, could increase by 2,000 children, plus or minus 500—again, acknowledging that there are margins of error—by the 2027 tax year.

REUBEN DAVIDSON (Labour—Christchurch East): Thank you, Madam Chair. It’s a pleasure to make a contribution on the in-work tax credit and to really pick up on content specifically around what the Minister was just answering in the child poverty space. On page 3 of the regulatory impact statement, there is a paragraph headed “There will be reductions to child poverty”. It goes on to say, “The impact on child poverty of option 2 (increase the IWTC by $25 per week from 31 July 2024) has not been modelled independently to of the other Tax Package changes, due to time constraints.” There appears to be a missing word here. And there’s some thoughts on that.

One is: what is that referencing—“to” something “of”. What should the missing word be? But more than that—more than that—the concern is that this work has been rushed, potentially done too fast, and that the matter of child poverty hasn’t been given the serious weight and consideration that it deserves. It also begs the question: if such a glaring omission is made already by page 3, is there the possibility that, on deeper reading of this, we will find further errors, further omissions, further concerns? I’m really interested to know from the Minister what word should be in there. Any word, just about, could be inserted in there and this paragraph and this statement would start to mean completely different things.

Now, if the target is to reduce child poverty—and the Minister has just given us some numbers, albeit with a rather large margin of error around what those child poverty reductions should be—surely the task of reporting and measuring child poverty becomes all the more critical, given that the Living in Aotearoa survey was developed because it was determined, probably by leadership at Stats New Zealand at the time, when the legislation was being drafted, that New Zealand did not have the appropriate data, either in our existing surveys or collected through administrative records, to measure persistent poverty or persistent hardship.

I realise the Minister doesn’t have responsibility for statistics, but given the context of yesterday’s Budget showing significant cuts to Statistics New Zealand, and already the cut and cancellation to the Living in Aotearoa survey—

Carl Bates: It was your idea.

REUBEN DAVIDSON: Sir, if you wish to take a call, we’ve just discussed the procedure for that. I’m happy to yield.

CHAIRPERSON (Maureen Pugh): Order! Please do not debate across the Chamber.

REUBEN DAVIDSON: Sorry, Madam Chair. If the member on the other side of the Chamber wishes to take a call, I would be happy to yield on the provision that he is going to deliver a proper speech—

James Meager: Point of order. Speaker’s ruling 62/4: “it is not for the member with the call to invite another member to intervene”—so I’d ask you to reflect on that Speaker’s ruling, please.

REUBEN DAVIDSON: Thank you. I’ll reflect on it deeply! But I will get back to what I was discussing, and I’m concerned that I may run out of time in my allotment to actually raise this issue. And it is a serious issue.

To refresh on what I was saying, for us to know if people are persistently in income poverty or material hardship, we need to collect longitudinal data—that is, we need to go back to individual households, families, children multiple times, across time, to ask their income, the age and relationship profile of the people that are living in a household, and their material hardship. Now, a set of 17 questions collected on surveys can never be obtained through administrative data. At a minimum, we need longitudinal surveys that follow families for five to six years. And that’s exactly what we saw confirmed as cancelled in yesterday’s Budget. That’s a real shame, and it makes a mockery, in my opinion, of claiming that there is any meaningful intention on this part of the Budget or on the actions in the in-work tax credit to reduce child poverty. So my questions to the Minister are—[Time expired]

CHAIRPERSON (Maureen Pugh): I’ll call Reuben Davidson to finish his contribution.

REUBEN DAVIDSON: Thank you, Madam Chair. Just to recap, before we ended there, the loss of a longitudinal survey that followed families for five to six years is a huge loss. And in the regulatory impact statement—

CHAIRPERSON (Maureen Pugh): I’m sorry to interrupt the member. I extended your call so you could complete your contribution—the questions you were asking.

REUBEN DAVIDSON: Sure. Thank you, Madam Chair. My questions to the Minister are: what engagement has the Minister had with the Minister of Statistics to ensure meaningful longitudinal—and that’s the really important part here; not admin data, longitudinal—research and surveys to measure the real and enduring effects and impacts of child poverty?

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. I’d direct the member Reuben Davidson to the Child Poverty Report 2024 that’s been released this morning. That will outline a number of aspects in regards to the member’s question, not necessarily directly related to this bill.

CARL BATES (National—Whanganui): I move, That debate on this question now close.

Hon Dr DEBORAH RUSSELL (Labour): Thank you, Madam Chair. I want to revert to something that my colleague the Hon Ginny Andersen was discussing and take the question a step further. Now, in her call, the Hon Ginny Andersen was talking about the interaction of the minimum family tax credit, the in-work tax credit, paid work, all the sorts of sources of income and tax credits that people interact with, and she was concerned that people wouldn’t know what their entitlements were. I realise, from my previous time in a similar role to the Minister in the chair, Simon Watts—that, often, people who are getting minimum family tax credit and sort of wavering between benefit and paid work, they do go through complex calculations. One of the standard ways they work out whether or not to take on those extra few hours of work is that they ring up Inland Revenue and they ask questions of the call centre, and they go through that whole process of engaging with Inland Revenue directly in order to ascertain what their entitlements are.

So, given these changes to tax thresholds, the in-work tax credit, the minimum family tax credit, and so on, which are really quite complicated, and what we anticipate will be the number of people who really don’t understand what they’re going to get, my first question in this regard is to what extent the Minister has, as a matter of prudence, I guess, ensured that Inland Revenue is resourced—I do have another question, Minister; just hold your fire—in order to handle all those incoming queries. Now, obviously, there’s the tax calculator on the website, but that probably won’t work for the people who we’re talking about who are making that very marginal decision about whether to take on more work or to continue as they were, and so on. So there will be some pretty complicated stuff going on in that regard. So just a resourcing question there.

There is another point here that I do wish to consider, and it’s one that we were working on when we were in Government and I’m sure the current Government is continuing to work on, and that’s the people who end up in debt to Inland Revenue—sometimes to the Ministry of Social Development (MSD)—because they’ve gotten their numbers wrong or they don’t understand the complexity of the law. So they get too much of a tax credit—their Working for Families tax credits get overpaid and they end up in debt. Now, some of the time, this is pretty easily sorted with the end-of-the-year tax calculation and so on, but, again, for these families who are in a pretty marginal state, who are on pretty low incomes, then getting too much Working for Families tax credits creates a problem for them because they then have to start paying it back on an already marginal income.

Now, the standard strategy for a lot of families is just to, when they’re claiming those tax credits, overstate their income, and that means that they get a lower tax credit during the year and they get the difference sorted out at year end. It’s a good strategy, I know, particularly for lots of families where their income is earned from a business or something where the flow is a little bit uncertain and it gets sorted out that way. But these families who are really marginal, they actually want their tax credit as they go. They need that money on a week-by-week basis, so they are actually more vulnerable to falling into debt if they don’t get those tax credits right.

So, again, it comes down to a resourcing issue for the Inland Revenue Department, and do they have people on hand to help with that? But, also, has the Minister given any consideration to ensuring that families don’t end up in debt to Inland Revenue, to MSD, as a respect of getting the tax credits wrong? And is there any ongoing work in that regard to ensure that when these tax credits and the tax threshold changes flow through to people, they get the right amount and not more than the right amount so that they don’t end up in debt, which then just creates a further burden for them?

RICARDO MENÉNDEZ MARCH (Green): Thank you so much, Madam Chair. I wanted to expand on and bring some lines of question on clause 27 in relationship to the increase of the in-work tax credit. I particularly wanted to focus on whether the Minister has sought any advice from the Ministry of Social Development particularly around whether the increase to the in-work tax credit would widen the wealth and income gap between those in work and those out of work. I wanted to particularly, I guess, get an analysis from the Minister about whether there’s any concerns that that increased income gap between those on the benefit and those in employment would have negative impacts. I mean, the regulatory impact statement (RIS) on the in-work tax credit changes talks about how the effectiveness of this tax credit has diminished over time, particularly when it comes to people being able to take up and stay in employment.

I wanted to ask whether the Minister knows where that assertion had come from and whether there was any research around the effectiveness of the in-work tax credit at all in its effectiveness to support people into employment, because, I mean, one thing is to have a value statement and an assumption that if you have this tax credit, people will take up employment; the other one is actually having that based on any substantive research. So that’s my second question: what research has the Minister seen that substantiates the statement in the RIS that the in-work tax credit supports people into employment?

We’ve talked about how the in-work tax credit is seen as make-work pay, but that takes me to my third question, which is whether he considers caregiving as work and labour that actually deserves to be remunerated as such. Right now, the way that the in-work tax credit is laid out completely ignores caregiving responsibilities that sit outside of employment relations. So my third question is whether he has a view on whether caregiving is work; if not, why not? At the moment, that line of work, which the Greens do consider to be work that is currently undervalued and under-resourced, fails to be acknowledged in the in-work tax credit. So when we’re thinking about, for example, caregivers, parents, people who support disabled people—they’re not eligible for this payment. They don’t benefit from the increase in this payment, and those who may be receiving a benefit, for example, to do that work, which the Government doesn’t officially consider work, will continue falling behind compared to those who will benefit from the in-work tax credit.

The other question that I had—and I wanted to pick up on where my colleague Francisco Hernandez took over from—was whether he actually had any information around the people who will have an increased effective marginal tax rate as a result of the changes outlined in Part 3, and whether he could give us, or whether he even received, a breakdown on who these people are. I think it’s one thing to have in the regulatory impact statement a kind of broad assertion about how some people will have a higher effective marginal tax rate, but, as I said, I’m starting to get really concerned around the robustness of the work the Government undertook to put forward these tax cuts, the inability for the Government to actually give us a population breakdown on how these changes will benefit or widen issues that already exist.

So, to recap, I’m interested in whether he’s received any advice around what the gap will be between those out of work, which includes many disabled people, and those who will receive the increase in the in-work tax credit; whether he’s engaged with the Minister for Social Investment in this; a breakdown in the population groups who will have a higher effective marginal tax rate as a result of these changes; and whether the Government, and whether the Minister himself, considers caregiving to be work, and, if not, why not? So far, these changes will widen the gap from those who have, primarily, caregiving responsibilities as opposed to those that are in paid employment.

Hon SIMON WATTS (Minister of Revenue): Just in response to the member’s question, I mean, Part 3 is a very tight section, but I will provide a little bit of context outside of that, just to elaborate. So, as part of this process, Inland Revenue and officials have engaged extensively with the Ministry of Social Development throughout in regards to the interaction with this point. The point of this payment is to incentivise people to leave the benefit and get into work, and I think that’s a pretty sensible objective. The reality is—and the member may want to reflect on why this was the case—that this has not changed or been adjusted since Budget 2015. So what we’re, in effect, doing is making a change to reflect that implication, to incentivise moving from benefit to work and provide that benefit to nearly 160,000 households. That is good news and should be something that should be celebrated. So I’m looking forward for the member to support this aspect.

CATHERINE WEDD (National—Tukituki): I move, That debate on this question now close.

CHAIRPERSON (Maureen Pugh): I think there is still a bit of scope for interrogation of this part, but I am aware that we have started to get some repetition.

RACHEL BOYACK (Labour—Nelson): Thank you, Madam Chair. The South Island thanks you, Madam Chair. Look, I wanted to come back because I appreciate that there has been—

James Meager: Oh, new material, Rachel Boyack.

RACHEL BOYACK: Look, I think Mr Meager should take a call, but I appreciate—

Hon Member: Yield.

RACHEL BOYACK: —we’re not going to go there again—that on this side of the Chamber there have been some questions that we put to the Minister again. I guess I’ve made this point, and I often make this point during urgency at this stage of a debate that we—

Hon Member: New material?

RACHEL BOYACK: I’m going to make it again. The reason I’m making this is that tax is actually the most significant topic that we can discuss in this House, I would put on record, and the Minister is agreeing, so I’m really hoping that he’s actually going to come back and answer the questions that have been put already by myself, by my colleague Deborah Russell, and by my colleague Ginny Andersen specifically around the interactions between these tax credits. I note that we do not have the opportunity to interrogate this matter in front of a select committee. The Minister has access to his officials to help guide him. So we would like to have a response to that question. We’ve been discussing this on this side of the Chamber; we would like to hear about it.

The particular issue we have is that when all of these different tax mechanisms interact with each other, there are times when a person could end up, as the Hon Dr Deborah Russell noted, even being in debt to the IRD, which is not something, I think, any member in this Chamber would like to see—

Glen Bennett: Not at all.

RACHEL BOYACK: Definitely not at all, Mr Bennett. So the question I had specifically for the Minister was that, under Labour, we introduced payday filing, which, I’m sure, everyone understands is when there is a real-time tracking between the employer making the payment, and the IRD, to ensure that we have that real-time record. I’ve certainly been contacted by the IRD before to say, under that system, that I was on the wrong tax code at one point. The question we had that was quite specific around this piece of legislation is: what mechanisms is the Government going to look at in terms of ensuring people are advised, rather than waiting until the worst happens at the end of a tax year and they have a debt to the IRD? I’m sure none of us would want to see that, particularly—let’s be clear—with low-income families; I think we would all like to make sure that they are receiving the correct mechanism throughout that year.

I see the Minister jumped up, but the last time that happened, I didn’t get an opportunity to complete my call. The other thing I just wanted to ask the Minister specifically, because he did, earlier in the debate, bring in the conversation around child poverty. I note, yes, this is a tight debate, but the Minister has actually introduced that matter himself into the debate. We on this side of the House do have questions about child poverty. My specific question is that we have seen from the Budget figures that there is an indication that child poverty numbers will increase in New Zealand as a result of these changes. On this side of the House, we are concerned about that. We put in place measures to ensure that we knew what the position was for the country, and we’re very concerned to see that going backwards. So my question to the Minister is: what specific advice has he received on the interaction between the tax changes that the Government is making through this bill? Again, I note we do not have the opportunity to get a departmental report. The Finance and Expenditure Committee—

Todd Stephenson: It’s just normal. Normal practice.

RACHEL BOYACK: —would get an independent adviser to come in and actually ask these questions and provide this advice. We are not having that opportunity. I’m just noting, under the Standing Orders, Mr Stephenson—go read a book—that this is an important part of the debate. We do have officials here who can advise the Minister, who could answer these questions. We on this side of the Chamber would like to hear those answers. Thank you.

RICARDO MENÉNDEZ MARCH (Green): Thank you so much, Madam Chair. I do want to echo the fact that we haven’t had a select committee hearing. I also want to respond to the Minister’s comment that while he may claim that the clauses in Part 3 are tight, actually this is regarding the increase to those base rates. Those have significant impacts. So let’s not conflate short language in legislation to a small impact to our communities; I think that’s a disservice to the people who this bill claims to serve.

The Minister alluded to the fact that he had engaged with the Ministry of Social Development (MSD), that there was engagement with the Minister of Social Development. I want to ask what was fed to him and to the Government from the Minister of Social Development in those consultations. Because I do think that we didn’t have a select committee hearing; we could have had robust engagement and evidence in relationship to what the Minister of Social Development said. He’s got the officials behind him. So I think this is one of the flagship things in the Budget. The Government owes the public to have a robust discussion on who exactly will be impacted. We haven’t received any form of engagement or even an address to, for example, the evidence that the in-work tax credit and increases to the in-work tax credit actually support reducing unemployment. I think the Minister owes the public a bit more robust engagement with the evidence behind this.

The Minister has also not been able to address, and has refused to even take note, who the people who will face a greater effective marginal tax rate are. Who are these people? He’s got the officials behind him. If he cared about a robust debate, he actually would be seeking greater advice, because this, like I said, isn’t just a casual bill; this is one of the flagship things in the Budget. I think, if members of the Opposition are trying to ascertain the robustness of the work, the Minister owes us some answers.

Finally, I know that we’ve talked about the impact on disabled people in relationship to other parts of the bill, but I did want to get a sense of, in relationship very specifically to the increases in the in-work tax credit base rate, how many of those parents who are in work, who will receive a top-up, have disabled children, and have other additional needs. I wanted to get a sense as to whether he had had any interactions with MSD specifically in those interactions in the system.

Then, I wanted to get a sense of what engagement with Whaikaha had been specifically on the increase to the in-work tax credit.

Hon SIMON WATTS (Minister of Revenue): With not risking more repetition, but I will note again that we have undertaken significant engagement with multiple agencies in regards to this. One of the uniquenesses—and maybe this is an incentive to try and accelerate and close this out, but we’re talking about legislation that hasn’t yet passed. It needs to pass before we know what impact that will have exactly. We won’t know who the individuals are by specifics until they file their returns in the future. So asking questions about who these people are and what they are in the specific nature is just simply not possible. So the theoretical element of the question is without basis.

Hon GINNY ANDERSEN (Labour): Thank you very much, Madam Chair. I’ve got a very specific question in relation to the independent earner tax credit. The Minister might want to revisit his last answer, because I think what he just said was we should pass legislation and see how it works and then we’ll know what it does. Like, that’s just loopy. That’s like, “Let’s just pass some stuff and see what happens, and then we’ll know what it does.”

I think it’s incumbent upon lawmakers within this House to go through some regular process, a regulatory impact statement, some analysis, some data, some evidence, to understand what the potential impacts of legislation would be on the population of New Zealand, instead of just decreeing law and seeing where it lands. So I’m quite struck by that comment by the Minister and he may wish to revisit it because it isn’t really that sensical to a lot of New Zealanders—who will be at the other end of this legislation. I think it would be within their best interests to understand that he’s actually turned his mind to how it might impact upon them before he simply passes this legislation through urgency.

So my question, specifically, to the Minister is in and around the independent earner tax credit. We know that what this bill does is it lifts the upper-income threshold from $48,000 to $70,000, but that lower threshold limit remains at $24,000, and this all comes to into effect on 31 July. So we know that the independent earner tax credit is available for those individuals who might not be eligible for other kinds of Government support. So they won’t be eligible for Working for Families or a main benefit or even superannuation. So the abatement rate for this tax credit will remain at 13c and this will apply to every dollar of income over $66,000 per annum.

But I would like the Minister to confirm and specify—because I’ve had some queries from people who are sitting right around that threshold, so this is where families are looking at what they earn, looking at where they’re eligible, whether they’re under that limit or over that limit. Can the Minister confirm that this would mean that there is, or there is not, any remaining entitlement to that independent earner tax credit when a person’s income exceeds that $70,000 annual amount? I think that’s where a lot of people are really doing those sums and looking to see whether that works for them or not.

The second question that I have for the Minister relates to increasing the in-work tax credit rate. I think we haven’t actually had this clearly answered, and so what I want to know is that if taxpayers receive more from the previous one, the independent earner tax credit, than they would the in-work tax credit because of the change, does the IRD do that, or not? Or is that incumbent upon the wage earner, the person who’s paying the tax, to figure that out? Are people required to do those sums, figure out which one they get more on and do it themselves, or is that work that the IRD will do on behalf of New Zealanders?

Furthermore, can the Minister speak, is the IRD well-resourced enough to be able to be doing all this work? There’s going to be hundreds of thousands of New Zealanders coming forward with questions about which tax credit they’re eligible for, how they interplay with each other. Is the IRD going to have their 0800 number up and running without two hours of waiting time, so that New Zealanders are able to get answers to these questions and figure out how they go about getting additional money each week?

So they’re my two specific questions to the Minister. It’s around the $70,000 tax threshold, whether they’re eligible; and the second one is on that interaction—whether IRD proactively makes that change for them or whether that is incumbent upon the person.

RYAN HAMILTON (National—Hamilton East): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

CHAIRPERSON (Maureen Pugh): The question is that Arena Williams’ tabled amendment to amend clause 27 be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendment not agreed to.

A party vote was called for on the question, That Part 3 be agreed to.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Part 3 agreed to.

Part 4 Income Tax Act 2007 amendments commencing 1April2025

  

CHAIRPERSON (Maureen Pugh): Members, we now come to the debate on Part 4. Part 4 is the debate on clauses 33 to 39, “Income Tax Act 2007 amendments commencing 1 April 2025”. The question is that Part 4 stand part.

Hon Dr DEBORAH RUSSELL (Labour): If we thought that the last part of the bill was exciting, this is even more exciting in this part. Ha, ha! I had hoped the Minister would be especially excited about it that he would stand up to explain what this part of the bill is about, but he’s been in the chair for a long time.

These are a whole series of Income Tax Act amendments. And it’s quite curious because it says, “Income Tax Act 2007 amendments commencing 1 April 2025”. We’ve already had a bit of a discussion way back in Part 1 about the starting date of a lot of the tax threshold changes—31 July. I did have one final question for the Minister on that part, and that was whether that was because it’s Milton Friedman’s birthday on 31 July. But perhaps not. Nevertheless, we would have expected that most of the amendments and changes would take place from that date.

But here we have this part of the bill that is talking about all the amendments starting from 1 April 2025. So that’s a curious question in the first place as to why it would start from 1 April 2025. So just before we really get going on this part, I’m going to invite the Minister, I guess—I hope he’ll explain exactly why we’ve got these ones starting on 1 April 2025. Can someone jump up?

Dr TRACEY McLELLAN (Labour): Thank you, Madam Chair. Thank you, my colleague the Hon Dr Deborah Russell, who I know is very passionate about all things tax and very learned as well.

I think it would be good for the Minister (a) to provide us with that sort of foundation knowledge—that little bit of background that Deborah Russell has asked for. But when we think about Part 4 in particular, as opposed to Part 3, which was described as just a whole lot of numbers changing—but as we found out throughout that process, it ended up being not quite so technical and there were some real nuggets of interest in there that without asking those questions we wouldn’t necessarily have had those answers elucidated to us in lieu of, obviously, there being no select committee process.

So when I turn my mind to Part 4, I suppose, which is a very technical part of the tax change—flowing the tax threshold changes to all sorts of other thresholds in the actual Income Tax Act, if I have read that correctly. I wonder if the Minister could tell us a little bit more about how those threshold rates of the new tax thresholds—I think they’re on page 20, if I’m in the right part; clause 33 to 39. Yes, so if we look at page 20 about the fringe benefit tax rates, just as an example, it’s not clear from the bill. So could you just talk us through that table in particular in relation to those fringe benefit tax rates. I think that background will help inform the rest of the questions that we’ve got about this part in particular. But if you could do that, that would be much appreciated.

Just looking at colleagues here, I know that there’s a couple of other questions probably looking for that elucidation of that foundation work. And I know that Dr Deborah Russell has some other technical questions to ventilate on this part before we sort of move on. So that would be much appreciated if the Minister could do that, please, and I’ll come back and ask my other questions subsequent to that answer.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Chair, for the opportunity to provide a little bit of context on what is a very exciting Part 4 of this bill.

Now, what, in effect, is happening with the dates here is that the overarching changes that we’ve outlined will be effective from 31 July 2024; however, there are a number of consequential tax changes which will occur from 1 April 2025. The member asked the question in terms of why that is the case. Well, primarily the reason is to reduce the compliance and administrative burden from the fact that we are starting a process part way through a tax year, so that when we make the other consequential adjustments on other tax groups, we want to start clean, in effect, and start from 1 April 2025.

So it’s very much just a very pragmatic and practical approach that officials have flowed through to enable us to deal with the reality of introducing tax threshold changes part-way through the year.

Hon GINNY ANDERSEN (Labour): Thank you very much, Madam Chair. My question is also in relation to table 1, which is on page 20 of the bill in question. I would like to know how the range of dollar and pay threshold and rates relate to the new tax thresholds and rates that are stipulated in that table at the top of page 20.

So what I think I heard, and if he can confirm, is that if this table is, in fact, about fringe benefit tax rates—which is not that apparent from reading the bill, to be honest. Could you clarify that? Specifically, it would be good to know how the range of dollar and pay thresholds and rates relate to the new thresholds and rates that have been proposed through the changes. Thank you.

INGRID LEARY (Labour—Taieri): I note that, picking up from where my colleagues have left off, looking at the ESCT—which is the employer superannuation contribution tax—a lot of people may not have heard of that, but that is very similar to a fringe benefit tax, except that it applies to superannuation contributions.

We’ve heard a lot of discussion about what the change to thresholds are attempting to do, but I’m really interested to know—given my capacity as Opposition seniors spokesperson and the information that I’ve had and the calls that I’ve taken over the last few months about the impact of superannuation and the superannuation gap for women—what advice or consultation there was for the superannuation contributions in these tables around these thresholds? Was there a gender lens put on it at all? Because this would have seemed a really good opportunity, in my view, given that there is a big disparity about the superannuation that many women are left with because of the stalling in their careers—often they go off, have children, whatever, and they don’t get to contribute. Now, under the previous Government, we had committed to having a superannuation scheme that meant that those women who took time out from their careers would still be able to benefit and to close that gap. I see it a lot in my electorate with homelessness. It’s called the “invisible group”, a lot of women who don’t have that money are often left couch surfing and so on.

So it would have seemed like an ideal opportunity here, when shifting these groups and looking at superannuation specifically—which is what this table does—to consider a gender approach and see whether there would be any kind of policy intervention, policy tool, that could have been used cleanly in this legislation to try to leverage off that; to close that gap. Given the speed at which we’re doing this in, and given the fact we don’t have a select committee process, I can harbour a guess and I would say, in all likelihood, that the Minister probably didn’t even remotely consider it, because I don’t think it’s reflected in any of the policies that we’ve seen.

But I would like it on the record, if that’s the case, because we don’t have a select committee process. Women are concerned; aged-care groups are concerned about the gender gap. This would have been an opportunity, maybe not to fix it but to at least get advice on that. I’d like to know if the Minister sought advice or if the officials provided any advice, or if he even turned his mind to what the implications of this would be for the superannuation gap for women.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. The member raises a fair point, and the reality is that if we go broader, the disparity for women, in particular, at retirement is a gap against men and that is a well-known factor. The reality of what we’re discussing here, though, within this bill, is the consequential impacts of changes in personal income tax rates. What the member is referring to is a broader conversation in terms of superannuation from a policy point of view, which is not reflected in this part of the bill.

CHAIRPERSON (Maureen Pugh): Members, the time has come for us to break for the lunch break. We will suspend until 2 p.m. Thank you.

Sitting suspended from 1 p.m. to 2 p.m.

CHAIRPERSON (Barbara Kuriger): Members, before the lunch break, we were debating Part 4 of the bill. So just a reminder that Part 4 is clauses 33 to 39, “Income Tax Act 2007 amendments commencing 1 April 2025” and the question we’re on is that Part 4 stand part.

Hon Dr DEBORAH RUSSELL (Labour): Before the lunch break, we were back to dates, and I did question the Minister over the 1 April 2025 start date for this part of the bill, in comparison to the 31 July 2024 start date for the changes to the personal income tax thresholds. I just want to make sure I’ve got the explanation from the Minister correct. The Minister explained that for changes to fringe benefit tax (FBT) thresholds and employer superannuation contribution tax (ESCT) thresholds, the decision was made to have those changes start from 1 April 2025 for compliance cost reasons.

The way the Minister’s nodding, I sense I’ve got the gist of that. OK, so that’s helpful. It’s a really interesting decision, and I’m looking to see if the Minister asked his officials to do any modelling of it, because what it means is that from 31 July 2024 until 31 March 2025, employers are going to be over-taxed on fringe benefit tax and on employee superannuation contribution tax in comparison to the personal tax rates of the employees on whose behalf they are paying fringe benefit tax and ESCT.

The fringe benefit tax thresholds are really, really carefully set. They look like very odd numbers, but they’re really carefully calibrated so that if an employee is paid entirely in money—you know, salary or wages—then their personal tax rates are as set out in the Income Tax Act. But if they are paid in a combination of money—pretty easily taxed—and benefits, say like the use of a car or whatever, then you have to do a whole lot of grossing up of the value of the benefit and then taxing it back, and there are some pretty complicated calculations that go into that space.

But the objective there is to ensure that if an employee is paid in salary and benefits—say, $100,000 worth of salary plus benefits—compared to an employee who is paid straightforwardly in just $100,000 of cash, that the tax rates that are applied, whether it’s through the personal income tax rates or a combination of the personal income tax rates and the fringe benefit tax rates work out exactly the same.

Now, of course, the employee never sees the fringe benefit tax rates; they are paid by the employer, because it’s the employer’s decision to use the benefit and things like that. What it means is that if these changes to the fringe benefit tax rates and the employee superannuation contribution tax rates are not changed at exactly the same time as the personal income tax rates, then employers—small businesses, large businesses, Government departments, medium-sized businesses, little one-person bands and the like—are being over-taxed on fringe benefit tax and employee superannuation contribution tax.

The amounts per employee are not going to be large, but it is still over-taxation, and by the time it goes across numbers of employees, it could add up to a fairly significant amount. So there are a couple of questions here. Since when does the party that prides itself on being the party of business—and that’s a bit dubious, actually—charge employers more? Since when do they add those sneaky extra costs onto employers? That’s exactly what’s happened here.

Now, there could be a good reason for this. It could be a good reason. It could be that by the time the calculations were done, the amount of extra FBT and ESCT per employee was outweighed by the compliance cost of doing the calculation. So you weigh up the amount of tax paid versus the cost of actually paying the tax, and sometimes you might as well just pay the extra tax rather than go through the hassle of doing the calculations. I’m hoping that was the explanation. I’m guessing that’s the explanation the Minister’s going to give to me in a moment, but I actually genuinely want to know what’s gone on there, because it looks odd.

Maybe I’ve got the wrong end of the stick on this, but I would like the Minister to explain it to me. Following his explanation, I do want to dig into this, because this is actually quite serious, so I’ll just wait for the Minister’s explanation on that.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. We’re back from the lunch break on the home straight of this bill. We are nearly there. Kiwis will soon have the benefit of tax cuts which they’ve been waiting for.

The prior member’s question in regards to this—she used the term over-taxation; it’s simply not the case. I mean, the status quo in regards to the rates is unchanged. The changing of the rates will come in on 1 April 2025. So it’s not that anyone’s getting over-taxed or more tax. The rates as they sit today are unchanged until that point in the future. Therefore, the reasons and rationale, as I outlined previously in an answer to the same question, relate to some of the compliance considerations of what happens when you introduce a change in the personal income tax rates part-way through a year. We’ve made that decision assessment based on the cost compliance trade-off, but rest assured that the rates of fringe benefit tax that are paid today don’t change all of a sudden today. They will be changing on 1 April, so no one’s getting over-taxed.

Hon Dr Deborah Russell: Madam Chair?

CHAIRPERSON (Barbara Kuriger): Francisco Hernandez.

Hon Dr Deborah Russell: I want to pursue this, Madam Chair; it’s important.

CHAIRPERSON (Barbara Kuriger): Share around.

FRANCISCO HERNANDEZ (Green): Thank you, Madam Chair. Just a couple of questions to the Minister. They relate to clause 34 all the way to clause 39. We know that from the tax cuts that result from this, some of it will probably have to be funded from borrowing, which will result in future taxpayers funding these short-term sweeteners while also taking on additional burdens due to the social and physical infrastructure deficit. These tax cuts will lead to about $17.1 billion of extra borrowing. The tax package costs $4.17 billion, which means that future taxpayers will be paying for them in terms of the deficits, not to mention the infrastructure and Public Service deficits.

So what advice have you had on the impact on future borrowing, and is this perhaps why they are not indexed to inflation, things like the pay rates? Because we won’t be able to keep paying for them in the future. And if we’re wanting to be providing services just at the same level of today—not even talking about improving services for the future, which is what we on this side of the House want—without raising any new revenue-raising measures and given that the operating allowance that the Minister announced yesterday is not even enough just to keep pace with current levels of service delivery—$13 billion of the $17 billion announced for the health spending is just to preserve existing services—what sort of analysis has been done on what the impact of these changes might be?

We’re really concerned that the impact of the changes that are happening in this bill will actually undermine the ability of future Governments to actually deliver on core public services, not even to improve them. What advice have you received specifically on the impact of the lost revenue from this tax package on future operating allowances? Thank you.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. I’m just going to help the member a little bit in regards to this question, because the information is clearly available that the tax relief that we’ve outlined, as part of this bill, is fully funded. The tax relief is fully funded through both savings and revenue initiatives. The Government is not borrowing to fund this tax relief, so it won’t have implications around inflation. So the whole premise around the point of that question is not based on the fact and the reality. The fact sheet provided with this Budget outlines a clear articulation of the annual average, both tax relief and savings, that adds up to the total cost of the package, which is circa $3.7 billion per year.

CHAIRPERSON (Barbara Kuriger): I want to make it clear to those who are asking questions that we’re looking for questions now, rather than speeches or assumptions, so we’re really sticking to the questions.

CAMILLA BELICH (Labour): Thank you, Madam Chair. I do have a lot of questions, because this is a very complex area of the bill. So, if the Minister would indulge me, I just wanted to ask a few questions around Part 4, and specifically clause 36 that replaces section RD 17(4)(c) with the low threshold amount. But in new section RD 17(4)(c)(i), they’ve got a secondary code of $0, and I just wanted the Minister to perhaps explain to us, as we might have been able to go through in select committee, on page 19 of the bill in clause 36 of the primary legislation, I just wondered if the Minister could just go through for the committee exactly the necessity—which I’m sure there is one, and I’m sure his officials, if he isn’t aware, will be able to tell him. But I’m interested in the answer of why have new section RD 17(4)(c)(i) when it just inputs a $0 factor into the piece of legislation. So that’s my first question.

The next question I had is in relation to clause 37, which looks at the different tax rates of taxable income that would apply. Now, in this particular explanation of it, obviously we’ve got the rows and then we’ve got the range of dollar in taxable income. I just wanted to know from the Minister, is this a convention that we only refer to a dollar amount when we’re obviously talking about a range of income? Why do we use the singular and not the plural in this instance? Is that convention or is that, in fact, an error in the bill? I’d be interested to hear that from the Minister. And you’ll see in table 1 over the page that’s also repeated.

In relation to the employer superannuation contribution tax (ESCT) rate, I know my colleague the Hon Dr Deborah Russell had some questions in relation to ESCT. This is a tax that I am familiar with, in the past when I’ve employed someone and done their payroll myself, having to go through that process of obviously paying the person, paying income tax, and then also paying the additional taxes in relation to superannuation. So I’m just interested, with that ESCT rate, I understand that that has not been changed but the tax rate has been changed. And I wanted to hear from the Minister: did he receive advice on also altering the ESCT rate in line with the change of taxation thresholds or is this not something he received advice on? I want to know what the advice is. And if he didn’t ask for that advice, why, in fact, he didn’t and why it wasn’t considered. So those are my questions for the Minister.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. I’ll work through these questions succinctly. The first aspect in regards to clause 36 inserting new section RD 17(4)(c)(i), in terms of secondary code at zero—I mean, it is no more complex than one starts at zero and works their way up from zero in regards to tax bands. So that is simply just articulating that point, which is very consistent with any tax bands.

In regards to the employer superannuation contribution tax in clause 37(3), the thresholds are higher than the personal income tax thresholds. And the reason for this is because of the concessionary treatment that allows for the employer’s contributions to be taxed at the employee’s marginal tax rate. In effect, that’s what you’re seeing flow through in regards to that clause, and that’s why it is what it is.

Hon Dr DEBORAH RUSSELL (Labour): We need to probe into this difference between the personal tax thresholds, the employer superannuation contribution tax (ESCT) rates, and the fringe benefit tax rates (FBT). If we’d had a select committee process, this is exactly the question we could have gone into in some detail, because it is complicated.

Now, the Minister of Revenue said in his last reply to me that the decision was made to leave the ESCT rates and the FBT rates at the same thresholds as they are at now, so there’s no change in how employers are being taxed—having to pay FBT and ESCT—in comparison to what they’re paying now. Here’s the problem with that answer—and there’s a whole series of things that flow from it—ESCT rates and FBT rates are set in comparison to personal income tax thresholds. They are very carefully calibrated to make sure that no matter whether a person is paid in cash or is paid in cash in kind, the tax paid is exactly the same. But now, we’ve got a difference. Because the ESCT thresholds and the FBT thresholds are not moving at the same time as the personal income tax thresholds, we have a mismatch between being paid in cash, or being paid in cash in kind. People who are paid in cash and in kind are, in effect, being overtaxed for the period from 31 July 2024 to 31 March 2025.

The fact is the individual employees never see that particular tax—the FBT and the ESCT—but the employer does. The explanation given, sitting in the regulatory impact statement, says that the other consequential tax type rates—portfolio investment entities, FBT, ESCT, retirement scheme contribution tax—would be adjusted from 1 April 2025. “This will allow more time to make the changes and reduce the complexity of the changes.” So it reduces compliance cost. It is a straightforward trade-off between compliance costs, on one hand, and paying extra tax, in comparison to personal income tax rates, on the other hand.

Here’s the question that flows from that: first of all, what modelling was done on how much extra FBT and ESCT employers would be paying in comparison to the personal income tax rate—not in comparison to what they’re paying now, but in comparison to the personal income tax rates that apply from 31 July 2024 to 31 March 2025—in order to make the assessment that it was better to incur more compliance costs rather than pay more tax? There would have to be an assessment of how much extra FBT and ESCT was being paid. So what modelling was done to calculate that? So that’s the first question.

The second question is: were employers consulted? There’s a choice there. Now, we’ve actually already got choices in the FBT system. There’s a really significant choice that employers already make between a couple of methods of calculating FBT. One ends up with them paying a bit more FBT, but it’s a simpler way of calculating it. So there’s a straightforward trade-off there—already in the FBT system—between compliance costs and tax and the actual tax paid. But that’s the employer’s choice. In this case, the Government has made the choice that the employers will pay more tax rather than having more compliance costs. So instead of allowing employers to make that decision, the Government has made that decision for them. Now, I’m assuming it’s going to be on good grounds, but I would like to know if the Minister consulted employers about what treatment they would prefer to have. Because in a case where there’s a trade-off between compliance costs and the amount of tax paid—and it’s compliance costs, so that’s the cost to the individual employer, not the Government’s administration costs—that should surely be the employer’s choice. So there’s a real problem there.

So I want to know from the Minister: what modelling was done to assess the amount of extra FBT and ESCT that would be paid in comparison to personal income tax rates—as the personal income tax rates are set from 31 July 2024 to 31 March 2025—so that that assessment could be made, and were employers consulted about it? So, as already happens in the FBT system, were employers enabled to make that choice about whether they would prefer to pay more tax or prefer to incur more compliance costs? Please, Minister.

CHAIRPERSON (Barbara Kuriger): Arena Williams—and just a reminder, because some people have now come into the Chamber—and I’m not referring to this particular member, but we’ve had people coming in—that we’re just looking for questions now, not speeches.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Madam Chair. I take your point and I heard your earlier ruling. You’ll forgive me—this is a new a brand of inquiry and I’m struggling to not explain it, so instead I will ask the Minister of Revenue a question, but I hope he will explain to the committee what it is that I’m getting to. My question to the Minister is: what are retirement scheme contribution tax (RSCT) and resident withhold tax (RWT)? In light of the previous contributions by my colleagues about the effect of the income tax changes on employer superannuation contribution tax (ESCT) and attributed fringe benefits, there’s also a flow-on effect for RSCT and to RWT, so we need the Minister to explain that to the committee. Then—

CHAIRPERSON (Barbara Kuriger): Can I just ask the member to repeat that question, because the Minister was taking some advice.

ARENA WILLIAMS: Absolutely.

CHAIRPERSON (Barbara Kuriger): So if you could just repeat that, because that was quite specific.

ARENA WILLIAMS: Yeah. Two questions for you, Minister: (1) what are RSCT and RWT; (2) what is the effect of making the changes that you have made without further amendment to RSCT and RWT?

My third question is: given the last time a National Government proposed to make similar changes to those you have made in clause 7, amending Schedule 1 of the Income Tax Act 2007, they made the flow-on changes to ESCT, RSCT, RWT, and attributed fringe benefits, why have you chosen not to make changes to RSCT and RWT in this bill?

FRANCISCO HERNANDEZ (Green): Thank you, Madam Chair. I just want an elaboration of the Minister’s answers to me about the deficit. If you’ll forgive me, I’m new to this place, so I’m still learning how it all works. If the projected Government deficit is $13.4 billion, how does the Minister’s assertion that there is not any borrowing for the tax cuts align with that kind of reality? Is it coming from the so-called magic money tree that members from the opposite money benches like to refer to? Is it not being borrowed? I have no idea.

I have a second question as well, which relates to all the acronyms that were being thrown out here. Can you tell me what the acronym “RESPCT” stands for?

CHAIRPERSON (Barbara Kuriger): I call Dr Deborah Russell, and specific to something that hasn’t been answered, please.

Hon Dr DEBORAH RUSSELL (Labour): I’m just going to say, Madam Chair, I do—

Hon Kieran McAnulty: Point of order, Madam Chair. Thank you very much. We acknowledge your direction to the committee in terms of questions, the issue being, though, as the Hon Dr Deborah Russell pointed out, the line of inquiry she has is regarding an area that is specifically complex, and her follow-up question was as a result of the response from the Minister that then drew other questions.

CHAIRPERSON (Barbara Kuriger): I accept that.

Hon Kieran McAnulty: But the direction that you just gave was that you’re seeking questions in a different area. So what I’m seeking to clarify is: if there are follow-up questions within the same area—

CHAIRPERSON (Barbara Kuriger): Follow-up questions are fine as long as they’re not the same questions.

Hon Kieran McAnulty: So the issue isn’t so much around relevance, as repetition? Fair enough. Thank you.

Hon Dr DEBORAH RUSSELL: Madam Chair?

CHAIRPERSON (Barbara Kuriger): The Hon Simon Watts just wants to take a call and then I’ll come back to you.

Hon SIMON WATTS (Minister of Revenue): I’ll disregard the member’s last statement, which was not a question; it was quite irrelevant. But RSCT is “retirement scheme contribution tax”; RWT is “resident withholding tax”. So that’s the definition around that.

The question before, previously, around modelling and consultation—Budget secrecy, a number of restrictions around the ability to consult specifically with these impacted aspects around fringe benefit tax (FBT). But what we do know, from historic terms—and the member will no doubt be aware of that, from their prior experiences—is that any introduction of changes part-year brings high degrees of complexity and compliance. That aspect is what has been the basis in regards to the decision.

No specific modelling was undertaken as a result of that, but we do know from the evidence that we’ve seen over many, many years that part-year adjustments do bring compliance and complexity, and the sector feedback consistently is that their preference is to start the year off clean, versus doing part-year. So that’s why the FBT changes are what they are.

Hon Dr DEBORAH RUSSELL (Labour): I do have one other set of questions around clause 39 that I would like to go to, but to keep things straight, I just want to go back to this issue that we’re really pursuing right now. I am a little surprised, to be honest, that no modelling has been done. Now, it would take a bit of time with a spreadsheet and a calculator to work out the difference in fringe benefit tax (FBT) and employer superannuation contribution tax (ESCT) that would be paid per employee given the changes in the thresholds. It could be done—and I note the bank of excellent officials there. It’s a set of numbers and it could be calculated, and it could have been calculated within IRD. I take the Minister in the chair Simon Watts’ point about consultation, but I notice that they did consult with payroll providers, so some consultation’s good and some consultation is bad? Let’s have a little think about that.

I am actually genuinely serious about this, because what is happening is that employers will have to pay more tax in comparison to the personal income tax rates. This is extra tax—not in comparison to what is being paid now but in comparison to what will be paid from 31 July—being loaded on to employers. Now, I take the point about the trade-off with the complexity of the compliance costs. That is a known phenomenon, and the Minister and his officials are quite right to say that there are compliance costs there, but why was the choice not offered? That’s the thing, and the Minister hasn’t answered that question yet. I asked it previously and it hasn’t been answered yet. In the FBT system as it stands at the moment, there are two ways of calculating fringe benefit tax: one has higher compliance costs; the other one has higher actual FBT. So we already have the concept of a choice being over to employers sitting within the FBT system. Why did the Minister not allow employers to make that choice as to whether employers wanted to incur higher compliance costs or whether employers wanted to incur higher FBT tax rates in comparison to the personal income tax rates that are in force from 31 July until next year?

That is the last question I’ll ask on this topic. I do have another set of questions, but I’d like to hear from the Minister on that, and then I’ll go back to the one further set of questions that I would like to ask on this part. [Time expired]

CHAIRPERSON (Barbara Kuriger): Perhaps if the Hon Dr Deborah Russell could ask that one more set of questions that you just referred to.

Hon Dr DEBORAH RUSSELL: Oh, I’ll ask the second—right. May I have a five-minute call on this? It’ll take a little bit of extra.

CHAIRPERSON (Barbara Kuriger): It is a five-minute call—as long as it’s based on questions.

Hon Dr DEBORAH RUSSELL: It is. The same thing is applying now in clause 39 of the bill, and this is the new portfolio investment entity (PIE) rate, the prescribed rates for PIE investments and retirement scheme contributions. This one’s even more interesting, because what is happening, as far as I can tell, and the Minister will be able to confirm this with a nod; you might want to wait, Minister—but the rate at which tax is paid in PIEs has a series of thresholds, and for most of us on the higher rates, we get a concessionary tax rate. So if you’re on the 39 percent rate, your PIE rate is, nevertheless, 28 percent; if you have a 33 percent rate, your PIE rate is 28 percent; 30 percent rate, your PIE rate is 28 percent; if your income tax rate is 17.5 percent, your PIE rate is 17.5 percent; and if your income tax rate is 10.5 percent, your PIE rate is 10.5 percent. So there’s concessions at the higher end.

Now, as far as I can tell, the PIE rate thresholds are not changing until 1 April next year either. That’s correct? OK, I’ve got that correct. What that means is that low-income people who nevertheless are putting savings aside, as they would do through KiwiSaver and the like—you know, making contributions to KiwiSaver—are getting taxed at the same rate from 31 July this year until 31 March next year at the rate that applies right now. So those low-income people sitting in PIEs are not going to get the benefit of the lower rates until 1 April next year. I just wondered if the Minister could confirm that that’s correct. I’m trying to read this and get my head around it. So, as far as I can tell, those PIE thresholds are not changing till then. It means that low-income investors in KiwiSaver are going to keep on paying the same rates as they are now. Now, sure, it’s in comparison to the same rates as they are now, but they are not going to get the benefit of the changes to the income tax thresholds until 1 April next year. So it’s not just employers who are having to pay more FBT and more ESCT in comparison to the personal income tax rates; now we have low-income investors.

I think that’s what it’s saying. I would really appreciate it if the Minister would confirm that that is exactly what is going on. It’s even more important, given that those of us who are on higher incomes and are on the higher tax rates—on the 39, 33, and 30 percent marginal tax rates—

Carl Bates: Is this a question or a political statement?

Hon Dr DEBORAH RUSSELL: Oh, please take a call, Mr Bates. If you’re interested in this, please take a call. So if I could just get that confirmation from the Minister that that’s what’s going on, because it does make a difference. Thank you, Minister.

Hon SIMON WATTS (Minister of Revenue): Thank you very much to the member Deborah Russell for that question. The member is correct that the implications around the portfolio investment entity rates will not change until 1 April 2025, and the rationale, again, is consistent with the other concession tax rates that we’ve outlined today. To be more specific, the implications around that will be in regards to the managed funds entities and the compliance burden that will fall upon them.

The reality is that, again, this Government, on this side of the House, is implementing and putting in place tax relief and personal tax reductions; on that side of the House, they’re opposing that. So to be talking about a concept of not having increasing tax, the status quo of the rate in which someone is paid today versus where they’ll be in 2025—they’re not getting over taxed; that concept is just simply not correct. And I hope the member, through the process of what we’ve been through in this committee of the whole House stage, may be at a point of deciding, “Actually, maybe we should support this bill, because, actually, we do want to support hard-working Kiwis with tax relief.” That would be a really good outcome from this committee of the whole House stage, but I’ll leave that with the member.

CARL BATES (National—Whanganui): I move, That debate on this question now close.

CHAIRPERSON (Barbara Kuriger): The Hon Dr Deborah Russell, you said to me that you had one set of questions that was going to be relayed in your five-minute call—this is it, right? So I’m going to give you another call.

Hon Dr DEBORAH RUSSELL (Labour): Thank you. So I am focusing very specifically on clause 39, and I just want to express my shock at what the Minister has just said. The decision this Government has made is to ensure that low-income people, people who are on the lower tax thresholds—their marginal rates are 10.5 or 17.5 percent. The Minister has just confirmed that they are going to tax them more. That is appalling.

RYAN HAMILTON (National—Hamilton East): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

A party vote was called for on the question, That Part 4 be agreed to.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Part 4 agreed to.

Part 5 Other amendments

CHAIRPERSON (Barbara Kuriger): Members, we come to the debate on Part 5. Part 5 is the debate on clauses 40 to 44: other amendments to the Tax Administration Act 1994 and the Student Loan Scheme Act 2011. The question is that Part 5 stand part.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. I thought it’d be useful to provide a little bit of context in regards to the changes that are being proposed in this section of the bill because they are specific in nature, and it just will be helpful in order for us to get to any questions, if there are any.

The research and development tax incentive—or the RDTI—allows businesses undertaking eligible R & D activities to claim a 15 percent tax credit on eligible R & D expenditure. To participate in this process, a business must enrol and submit an application for approval, and then file a return subsequently. Under the current status quo, if a business makes a mistake that invalidates that approval, then they will not be eligible for the R & D tax credit, and one of the specific mistakes that they could make is when they have the wrong entity that is listed on the application process. Under the current legislation, there’s no ability for the commissioner to take into account a simple error and mistake and remedy that. They simply are ineligible to be able to claim that credit, which obviously doesn’t sound fair and reasonable—and nor is it, in our assessment—and hence why we’re proposing to make a change to ensure that if such a small number of taxpayers do make such mistakes, then there is discretion by the commissioner to make changes.

FRANCISCO HERNANDEZ (Green): Thank you, Madam Chair. Just for a little bit of context, this part of the bill is something that’s actually relevant to my portfolios. I’m the tertiary education spokesperson for the Green Party, something that aligns well with my student politics background.

My question is around the changes to the student loan scheme that’s being proposed. Are there any kind of planned further changes that this Government is considering, and, if not, will he rule out scrapping interest-free student loans for New Zealand - based borrowers? That’s something that’s really concerning to us here. The interest-free student loans are a really good way to make sure that people are able to study.

The second part of my question is that, obviously, a lot of the tertiary institutions in the country are in tough times at the moment, partly induced by the COVID economic crisis and partly induced by the border shutdowns and the lack of international students. So my question around this is: has there been any analysis or modelling done on how kind of disincentivising study might affect the further viability of our tertiary institutions, like the world-class one in Dunedin called the University of Otago? Thank you.

Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Madam Chair. I’ve got a very short—probably—question. Over here, we have been looking at clause 44 and we’re actually quite perplexed because it seems to do two quite inconsistent things. I understand how the base rate works generally, and that you take an average of the five-year bond rate and then you add a percentage to it. I’ve got the definition of “base interest rate” from the Student Loan Scheme Act in front of me, and it notes that you add 0.74 of a percent to the rate to get the actual base rate. But clause 44(2) says, firstly, to replace “0.74” with “1.74”, and that makes sense as you get a bit more money for the Government there. But then, in the very next subclause, it says to replace “1.74” with “0.74”, and “1.74” doesn’t appear in the definition section.

So, unless the Minister is doing a little circle and replacing it and then un-replacing it, it actually seems to be a bit of an Alice-in-Wonderland nonsense provision. It may be that it’s just a drafting error because the Minister’s been under a bit of pressure and this is a bit rushed and hasn’t been given the scrutiny that perhaps it should be having in a select committee, but it’s actually a really simple question. Is it a drafting error, or, if it’s not a drafting error, can the Minister explain where the “1.74” is in the definition in section 4(1) that he’s replacing with “0.74”, because, for the life of me, I can’t see it.

Hon Dr MEGAN WOODS (Labour—Wigram): Thank you, Madam Chair. I just have some questions for the Minister of Revenue around the research and development (R & D) tax incentive in clauses 41, 42, and 43 in this part of the bill. Thank you for the explanation that the Minister gave us. One of the things that I can’t find in any of the documentation that’s been supplied to the House is the size of the problem we’re looking to solve here. Obviously, there would be instances where a subsidiary company was carrying out the research activities, but the tax return was filed in the name of a parent company. I’d be interested to know the number of companies where this has been in place.

I notice there is a retrospective element to these clauses, as well, which is unusual. It is unusual for tax legislation to contain retrospective clauses. My understanding from the legislation—and I’d like the Minister to confirm and perhaps explain the rationale why—is that these actually can be corrected back to the 2021-22 tax year, which is unusual. Would the Minister please give us an indication of the size of what they’re expecting to be the corrected tax returns from those tax years that have already occurred to be, and also whether or not the Minister took any further advice around the research and development tax incentive (RDTI) in terms of subsidiary companies and parent companies in respect of eligibility and in terms of whether or not it was a multinational company that had established an R & D subsidiary here in New Zealand that was carrying out the activities—whether that has thrown up any issues. I’m interested. I was one of the Ministers that helped put together the RDTI and these were all questions we had, so I would be interested to know.

The other thing that I am interested to know is whether, in any way, any of the policy advice on the provisions here is also connected to another measure that is contained in the summary of initiatives for the Budget, albeit as a footnote—that is, the scrapping of the in-year payments loan that was introduced in March 2023. That in-year payments loan on the RTDI was introduced by way of enabling small businesses and supporting smaller businesses so that they wouldn’t have to wait for the end of the tax filing year to receive the revenue that they could recycle back into their business. It was a workaround in terms of how we could get cash back into those businesses before that time. It says that the temporary in-year payment loan was introduced to improve cash-flow performing businesses by providing a loan while businesses waited. The footnote goes on to say that it’s a temporary mechanism with a permanent solution providing in-year payments.

So, in preparing this amendment, I wondered whether the Minister had got further advice around what that more permanent solution would look like, and what a time line for ensuring that we are supporting our smaller businesses to be able to conduct research and development activities would look like. I think that that is something that around this House—all sides of it—all parties would agree is important: that we are supporting others than just our largest businesses to be able to conduct that most important work of innovation in the form of research and development.

It says that there are administrative complexities and there’s low take-up of the scheme. I wonder if the Minister could advise the committee what the take-up of that scheme was like and, if they have done further policy work, what any take-up of a more developed and more permanent scheme would look like. The Minister is quite correct in the footnote that occurs in the summary of initiatives that it was only ever intended to be temporary, so I look forward to hearing about what more permanent solutions may be put in play.

Hon SIMON WATTS (Minister of Revenue): Thank you very much to the members for those questions. I’ll start with the research and development tax credit question. My officials advise me that it is less than 10 taxpayers who are potentially caught within that. The fiscal consequence of remediation for those taxpayers as a result of this change is probably less than $10 million in terms of fiscal implication. I don’t have any operational detail in terms of what the nature of those taxpayers are, but that’s the scale of size, and the reality is that the change that we’re making, I think, is sensible and pragmatic for the reality of making errors in that regard.

In regards to the broader policy questions around the research and development tax credit and the role which it plays are not confined and relevant, necessarily, to this aspect of the bill. But more broadly, obviously, it’s an area that we’re having an ongoing review on because it is an important aspect in terms of our broader economic growth agenda.

The question raised by the Hon Duncan Webb in regards to I think it was clause 44(2) and (3) in terms of the “base interest rate” definition aspects: simply, Duncan Webb, what we’re just reflecting there is that the change that we’re proposing is only for five years. So, in effect, it will come in and then it will come out, and when I’m saying that, I’m referring to the 1 percent increase. Hence why you’ve got two aspects of definition there that flow through. It allows the reality of the five-year implementation to revert back to what it was before we make that subsequent change.

CAMILLA BELICH (Labour): Thank you, Madam Chair. I appreciate the opportunity to take my first call in relation to this part of this important bill. I am interested in the Minister’s last response to that question about the five-year period—and I know that some colleagues will have some further questions on that—because I can’t, for myself, see how replacing the exact same section with two different things works, and I don’t see in the changes that the Minister is implementing the five-year change. I appreciate that the Income Tax Act is a complex Act, and no doubt we’ll have some more questions on that, but I think it is really important that we figure out how that works.

I do want to speak about student loan interest, and I do have an amendment on the Table in respect of the clauses that we were just discussing—clause 44(2). But perhaps—I don’t know—depending on whether there is, in fact, some issue with that clause, maybe I may need to amend my amendment. But, essentially, the questions I have for the Minister are around the policy decision to decide to charge New Zealanders overseas with student loans additional interest.

I know that having interest-free student loans in New Zealand is not a cost-neutral thing. It does cost the Government money. It’s about the choices that the Government chooses to invest in, and so I was just wondering why the Government decided that this particular group of borrowers, who are already paying a much higher rate of interest on their student loan, should in fact have a higher interest rate. So my amendment to clause 44(2) is really to try and keep a change in scope. I could have said that I don’t think we should charge interest at all for overseas borrowers, which is a policy decision. I understand why there’s a distinction, because, obviously, we want to provide an incentive for people to come back to New Zealand, but the amendment that I’ve put forward is really to try and keep it in scope but to remove the Government’s proposed policy intent to add that additional 1 percent of interest.

The other issue that I wanted to cover—which isn’t 100 percent clear from the documentation surrounding this—is this. In fact, the increase in interest actually applies to New Zealand - based borrowers too, when they are late with their payments, and this is a bit concerning, I think. In a way, it’s possibly more concerning than the increase in interest rate compared with the overseas borrowers, and that’s because for people who are late on their student loan payments, the reason that they would be late, I can imagine, would be due to financial hardship, due to being in a difficult financial position, or due to the payments that they are required to make on their student loan once they earn above the threshold being too onerous.

It’s already, as I was able to research quickly, quite a high interest rate. I think, for 2024-25, it was 7.3 percent—quite a high interest rate in these terms. If you were to get that type of interest rate, I think you’d be quite happy with that return, but I’m just wondering why the Government and why the Minister would decide to do that for people who are obviously in a struggling financial position. They’ve taken the decision to get a student loan, they’ve done what the Government says—and we’ve heard from this Government that education is the great equaliser—they’ve participated in education, and they’ve got a loan. Presumably, that education is benefiting both them, their family, and their community. They are unable to make their student loan repayments for whatever reason. Maybe they’re self-employed, while, often, people who are in employment have regular deductions made by their employer and are more unlikely to be in a position of not having to make those student loan repayments. So, for whatever reason, they’re in financial difficulty. Why are we adding to their burden by increasing their interest rate on their student loan when, really, they’ve done exactly what both this Government and previous Governments have wanted them to do? They’ve bettered themselves through education.

There’s a cost of living situation that’s very tough for people at the moment, and it seems to me that with this change, we’re making matters worse. So I wondered about the advice the Minister took on that. I wondered if he could outline the policy intent for that. We know that there’s tough financial considerations, but for this particular group of people, they’ve bettered themselves, they’ve taken on education, and they’re obviously in a tough time, and we’re making things harder for them. So if the Minister could explain to me the rationale for that, that would be good. Also, if he could let me know, having considered those points that I’ve raised, whether he would consider supporting my amendment to clause 44(2).

Dr LAWRENCE XU-NAN (Green): Thank you, Madam Chair. Thank you for giving me the opportunity to take my first call on this part and also giving us the opportunity to speak on this part in lieu of select committee.

Now, my question to the Minister is on clause 44, and particularly in combination with the explanatory note on the change to the student loan - based interest rate calculation, because we do not have any form of regulatory impact statement on this. What I want to home in on is the phrasing of “to partially cover the loss in value of the scheme due to recent high inflation.” So the key point of my question to the Minister is around the modelling that has been done in relation to the amount of overseas and late student loans that would be collected as a part of this increase in the interest rate.

In terms of the research that I have had the opportunity to look at as our overseas New Zealander spokesperson, the fact is that over the last 10 years, we have seen student debt increase and the interest rate fluctuate from anything from 2.8 percent up to 6 percent. However, in terms of the sum of the student loan that has been collected, that has not increased. What we see instead, however, is that more overseas students are struggling to pay their loan because of the interest. They have such a high interest rate that they’re able to pay the interest but not the principal of that loan, to the point that in 2022—and this is something that we have to, unfortunately, find in a hurry because we’re under urgency—over 75 percent, roughly, of overseas borrowers are overdue in terms of the payment of their loan, to the total sum of debt of possibly more than $2 billion.

So, again, the question is: what modelling has been done to show that this is, indeed, going to be collected, rather than it being a way of just simply punishing overseas New Zealanders who may be based in and working in countries where they do not earn a high enough salary to be able to pay off their student loan based here, in Aotearoa? So that is a question to the Minister.

In addition, in terms of the Cabinet’s own announcement by the Minister for tertiary education, she has said that, taken together, these initiatives are a sensible approach to tertiary education funding that reward hard-working students. But what we see here is that Inland Revenue is also moving into having more options to actually penalise these students who are going to be coming home even for holidays or, potentially, if their family members are sick—penalising them and, potentially, even detaining them at the airport. So, again, as the overseas New Zealander spokesperson, my second question is: when this was done, was there any consultation done with our New Zealanders—with our own people overseas—when they decided to increase the interest rate?

So my two questions are: number one, what was the modelling that was done around this that suggests that we will be able to collect more money in order to balance that loss in value of the scheme; and number two is whether there has been any consultation that was done with overseas New Zealanders on the impact that this will have for them in terms of the increase in the interest rate, and whether that will affect their ability to come back home?

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. Unsurprisingly, with the Budget process, we don’t consult with the public before we release the Budget. So, in this case, we didn’t consult with student loan borrowers before making the announcements yesterday, but that’s no different to any Budget process in that regard. The key challenge that we are reflecting here is the change in value due to the implications of inflation. We’ve time-bound that. We haven’t made it a permanent difference, so we are going to look to reverse that back to the status quo within a five-year period, and that simply just reflects the uniqueness of both the inflationary environment and also the implications around the interest rate on that loan. That is a scenario that we haven’t seen play through historically, but it is our point of view that we do want to revert back to the status quo in that regard.

I think what is interesting in a broader context, which is slightly outside of here, but in terms of your having asked about student loan, nearly 90 percent of that outstanding student loan debt is owed by overseas borrowers. The significance of the outstanding debt owed by taxpayers which we inherited in October is significantly higher than where it was in 2017, and student loans are an area in which we’ve also seen significant growth. Hence why, in the Budget, we’ve allocated $116 million to increase enforcement and compliance to collect the money that is owed to the Government, because every dollar that we don’t collect is a dollar that potentially needs to be found from somewhere else. That is the work, and within that allocation of compliance funding, there is specific money ring-fenced for targeting the collection of money that is owed in regards to student loans.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Madam Chair. This is my first call on this part, and the first opportunity to discuss Simon Watts’ big new OE tax. It is the tax that will apply to overseas young New Zealanders who have gone off for a year to work in London in the pub, people who have gone overseas to Australia to get some work experience, or it is someone who might be continuing on with their Master’s studies. They will be penalised by what the Minister has introduced in this part—Part 5 of the bill—which we are debating today, and I thank him. I thank that Minister for engaging so fulsomely with our questions today.

He has answered, very helpfully, my colleague Lawrence Xu-Nan and so he has blown that wide open for me to ask him plenty of questions about Part 5, and I will do so now. From 2025, overseas New Zealanders will be penalised and charged extra for their student loan debt because of this change, and those returning to New Zealand will face penalties at the border for just trying to come home. For visiting their mum, for coming home and seeing their friends and family, for attending a wedding—they will be stopped when they try to come into the country.

There is, in fact, extra money for it in the Budget for compliance enforcement costs, and why is that? I want to ask the Minister the first question I have here, which is: why is that debt, which he disclosed in his previous answers as being 90 percent of the outstanding student loan debt, with overseas borrowers? Is that because the enforcement powers that the IRD has are not adequate to actually recover the overseas debt owed by overseas borrowers? Is the Minister aware that according to the IRD’s annual report for June 2023, it received just 198 payments, totalling $16,421, from overseas borrowers? Is the Minister aware that the IRD cannot recover that debt from overseas borrowers, and is this a cynical measure to tell young Kiwis who have gone overseas that they are the rule-breakers, whilst the rest of us continue to pay and do not receive the tax relief that he says is going to occur from this saving?

I want to ask the Minister: has he considered the effect on New Zealand’s broader economy? When we make it harder, we make it harder with these provisions for young New Zealanders who have done the work, who have trained in our universities, who have upskilled, and who have gone overseas for further work experience to come back into New Zealand and invest in New Zealand, to make homes for themselves, to get jobs in our local economy, and to bring their skills home. Is this just one more barrier to those businesses that are crying out for skilled people to get young New Zealanders back into the country? Minister, I look forward to the answers to those five questions.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair, for allowing me to make a call in response to that question. Look, there’s two aspects here at play, and we’ll cover the first aspect relevant to this section of the bill, which is the increasing of the interest rate. The purpose of increasing the interest rate for a period of five years is to partially cover the loss in value of the scheme as a result of inflation. That’s what we’re doing, that’s why we’re doing it, and, as I said, it is a temporary adjustment to deal with the loss in value and that will achieve that outcome.

In regards to the second portion, on this side of the House, we make no apologies for the majority of New Zealanders who pay their taxes and do the right thing. What we have invested in in regards to increasing compliance and enforcement costs is to target those people that are not meeting their responsibilities. We do not make any apology for the fact that if you owe money and you’re not meeting your responsibilities, then the Inland Revenue will use their powers available to them to collect that money, because—guess what!—a dollar that they collect is a dollar that we don’t need to find from somewhere else. It’s a dollar owed to this Government, and it is not appropriate for the majority of Kiwis to pay their fair share and to have a very small element who don’t to be able to get away with that. That is not the way in which we see it, and that’s why we’re making the changes.

Dr LAWRENCE XU-NAN (Green): Thank you, Madam Chair. I’m flabbergasted at the fact that we’re talking about penalising our own people overseas who are trying to gain international experience—which I’m sure is something that the governing parties are interested in—and then bringing it back home. But we are now creating this barrier for them to come back home. Sometimes I do wonder about the Government’s priorities, but this is my question.

There are two parts to this particular section. There is the first part that we’re looking at, which is the increase of the rate by 1 percent for five years—which we have said, but five years makes a lot of difference; it’s the difference between whether you’re eligible to vote or not—for the interest on the student loan for overseas New Zealanders. However, it also means there is a second part, which is the increase on the late payment by 1 percent. So that’s 2 percent.

Now, the question to the Minister—and this is genuine. I would like to get some clarification from the Minister for those overseas New Zealanders, which I have mentioned. Currently, over 70 percent of overseas New Zealanders are unable to make their payment, which, again, would then become a late payment. In these kinds of cases, would these overseas New Zealanders get penalised by 1 additional percent as the base of their student loan payment on top of that an extra 1 percent as part of their late payment fee?

Is it going to be the case that those who are unable to pay—that’s more than 70 percent, and we heard that. The Minister has mentioned before that over 90 percent of the late payment that we’re seeing right now is from overseas New Zealanders. So, in these cases, when we have this incredible number of people who are unable to make their payment due to a variety of the reasons I have mentioned, because of the fact that maybe they are studying overseas or they are gaining their higher education overseas. I can say to you that in my own profession, while I was doing my Masters and my PhD, I was encouraged to go overseas for my PhD because if you want work in academia, apparently you need to have that overseas experience, and this is something that you see in academia in general.

For these people who will not be earning that much of an income and, in fact, who will sometimes be paying exorbitant fees overseas to international institutes in order to take up post-graduate education, or if they’re in a precarious employment situation or they might be overseas looking after a family member and so are unable to take work, are they being penalised for 1 percent of the base interest rate, and yet, when they are late on their payment, they are being penalised by an extra 1 percent for their late payment on top of that? So if the Minister could provide that clarification, that would be great.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. Well, we’re nearly there, aren’t we—we’re nearly there, aren’t we? You can hear it on this side of the Chamber—hey, we are nearly there.

Look, in regards to the question that was asked about the payment of debt, IRD have a wide range of options available for those that are in hardship, who genuinely have the inability to pay due to their financial circumstances. We are not talking about those individuals; we are talking about those individuals who simply make the decision “I do not want to pay my student loan.”, and for those individuals, it is absolutely fair and reasonable that there should be enforcement and compliance to ensure that the Government gets back the money that it is owed. That’s what we’re talking about here.

The change in regards to the percentage is dealing with the value of the scheme, and that’s what will effect that change. But do not confuse or conflate the reality of these people that potentially are in genuine hardship cases. There are procedures and protocol around that. We are talking about a large number of people that genuinely are choosing to say, “I am not going to pay this back.” That is not appropriate, and that is not taking personal responsibility for the fact that they owe this Government money.

Hon BARBARA EDMONDS (Labour—Mana): Thank you, Madam Chair. I do want to ask the Minister a number of questions, in relation to both clauses 41 and 42. But, actually, since we’re on student loans, I want to go back in response to some of the terminology that the Minister is using around the value of the loan.

I understand why the Minister wants to increase the base interest rate, for example. It’s an incentive, I’m guessing, for the Minister to have those offshore borrowers to pay back the loan faster. I’m guessing that’s the policy purpose of this. My question, though, as the Minister refers to it as the “value of the loan”—now, that’s quite a wide term, and for student loan purposes, you can have the fair value of the loan or you can have the impairment value of the loan, and I think the impairment value is what the Minister is referring to when he refers to the “value of the loan”.

An impairment value is, basically, how much student loan borrowers owe the Government, how much the Government thinks it is going to collect from them, and, basically, you deduct one from the other and that’s where we come to the impairment value of the loan. Or if the Minister is actually talking about the fair value of the loan, he’s talking about the total of the student loan asset book and how that sits on the Government’s accounts. Just for the sake of this particular question, it would be, I would suspect, a contingent liability or it is a contingent asset.

So my quick question to the Minister—and I’ll take another call after the Minister provides me a response to this—is: when he refers to the value of the loan, is he talking about the fair value of the student loan, which is, basically, the full amount that is on the student loan books themselves, which is on the Crown accounts—

James Meager: It doesn’t matter—it’s not in the bill.

Hon BARBARA EDMONDS: —or is he talking about the impairment value of the loan? This is in relation to the bill, as the member on the other side of the Chamber has asked, because the Minister referred to it in relation to the value of the—which is why he’s talking about it.

James Meager: Unless there’s an amendment, it’s not in the bill.

Hon BARBARA EDMONDS: Again, the members on the other side are saying, “What has this got to do with the bill?” Well, clause 44 looks at a base interest rate increase in relation to the student loan. So if the members on the other side want to take a call as to how they want to explain fair value versus impairment value, I’m happy for the other members in the Chamber to keep going, but the interjections are actually providing me with more questions for the Minister. So I thank the other members of the House for asking and interjecting.

Let’s go again. Clause 44(1) says, “This section amends the Student Loan Scheme Act 2011.” Subclause (2): “In section 4(1), definition of ‘base interest rate’, replace ‘0.74’ with ‘1.74’ ”. Now, if the member wants me to read it again, what I could do is actually look at the Student Loan Scheme Act and have a look at the base rate that’s in there. Or, if the member would like to continue with his interjections, we can continue with my call while I’m waiting for the Minister to have a look at this, because, again, the question around the fair value of the loan and the size of it on the Crown’s accounts is a valid question to be asking, which is why I’m asking the Minister: is this the impairment value of the loan or the fair value, when he speaks in relation to his responses to other members on this side of the Chamber about the value of the loan?

Hon Dr MEGAN WOODS (Labour—Wigram): Thank you, Madam Chair. I just have a follow-up question for the Minister around the research and development tax incentive, and I thank the Minister for his very useful and informative answers that he gave to my earlier contribution, but my question is in response to clause 43(2). I asked the Minister about the rationale and the reasons why it is that there’s a retrospective element to this clause of the bill, and the Minister hasn’t answered on that, so I just would like it confirmed. Clause 43(2)—

Hon Simeon Brown: Well, only if you ask good questions.

Hon Dr MEGAN WOODS: I am asking questions; if you’d like to take a call, Mr Brown, I suggest you do. In terms of the retrospective element of clause 43(2), the Minister has told us there are probably only around 10 companies that are in this situation of having the wrong filing name in their return. My question for the Minister is whether he took advice on whether there were administrative fixes to this, either by officials within Inland Revenue or whether there was ministerial discretion that could be used, because what I’m understanding is that this is a legislative fix that’s taking the time of the House for 10 or fewer companies. What advice was he given by officials and what options did he consider when making this policy decision?

I don’t disagree with what we’re trying to fix. There will be companies, and only literally a handful of them, that have filed under the wrong name and that should be eligible for this tax rebate, and we’re fully in support of that. But I’m just trying to understand why it was that the Minister opted to insert clause 43(2) into this legislation, rather than going for an administrative fix.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. In response to that question in regard to the considerations: absolutely, we explored all options that were available that would avoid the need to have to undertake a legislative change. But official advice through to me was clear that the only way in which this could be effected was through legislative change, and we didn’t have the options around administrative change or any other discretion within the commissioner’s power. So we are where we are, and we did kick the tyres in regards to that to make sure that this was the only pathway, because there are plenty of other things that we can be doing. But that’s the reality of where we landed.

To the Hon Barbara Edmonds’ question in terms of the value, we are reflecting, when we talk about increasing the value of the scheme, the fair value of the scheme at a Crown accounts level. So, in effect, the immediate effect of changing that will increase that value of the overarching book.

Hon PRIYANCA RADHAKRISHNAN (Labour): Thank you, Madam Chair. I’ve got a couple of questions for the Minister around both the R & D tax incentive credit and also the student loan scheme part of this bill. Specifically to both clauses 42(2) and 43(2), with regard to the retrospectivity of this bill, I don’t think the Minister has answered the question around why it applies to the years 2021-22 and onwards as well. So I was quite interested in that, as well.

Also, thanks to the Minister for some of the clarification at the start of this process on Part 5, but, in that, the Minister mentioned that this was one such mistake that is often made. Also, thank you for clarifying the number of companies, I guess, that have fallen into this or who have made this mistake in the past. I was wondering whether there had been any advice on other such mistakes that might be made by companies with regard to this, and, if so, what some of the errors might have been. I was also wondering whether the Minister has received any advice on the potential of fixing some of those mistakes through this legislative process, and, if not, why not. So I’m really interested in that. But, as my colleague the Hon Dr Megan Woods has said, we don’t necessarily oppose this particular change, given that it applies to a small number of companies and will actually make things potentially a little bit easier for them if a mistake has been made.

With regard to clause 44, with the Student Loan Scheme Act 2011 being amended, I do agree with some of the points that have been made by colleagues on this side of the Chamber in terms of the additional pressure that this is likely to place on overseas-based students and what the implications may be in terms of them returning. But the questions that I have for the Minister with regard to this are reasonably specific. I think many of us will have people we know, whether it’s friends or family members, who may be in this position and are based overseas, and this OE tax, as Arena Williams quite aptly named it, is going to affect them. So I’d be really keen to know how this change is going to be communicated to people who live overseas currently. This is going to impact them. For many, if it’s a late payment, it could be because they are already struggling financially.

So, firstly, how will this be communicated, given that the people whom it impacts are likely to be based in various parts of the world? Secondly, what advice has the Minister received as to whether this change is actually also going to have any impact whatsoever on their behaviour? I’m sure there has been modelling done in terms of how much will be made through this. I think it’s pretty clear that the five-year period is to cover an increase in costs, and I think the Minister has mentioned that already. But what modelling has been done on the impact of this change or this increase in cost and late payment in interest charged, and so on and so forth, on changing the behaviour of late payments? Was there any advice on that, and, if so, what could that be?

Those are largely the questions that I have. I’m just really interested in some of the R & D tax incentive questions around some of those other mistakes that the Minister might have received some advice on; if there are any others, why those weren’t included in this legislative fix; and also some of that communication around the student loan.

Hon BARBARA EDMONDS (Labour—Mana): Thank you, Madam Chair. The reason why I popped up to the Table was just to check if I had missed, perhaps, a regulatory impact statement for the student loan changes. So I apologise to the Minister of Revenue if there is one, but I couldn’t find one on the Table. So my question carries on. Now that the Minister has clarified that it’s the fair value of the loan, and because there is no regulatory impact statement and I can’t see the supplementary estimates on the Table, in case that was there—maybe I should have a look afterwards.

But my question for the Minister is: what is the estimated increase in the fair value of the loan as a result of this particular change in clause 44? The reason why I ask the Minister for this—and if he can provide just some information around the workings—is that the student loan valuation model does reflect current student loan policy and some macroeconomic assumptions. So, obviously, the Minister is changing some of the student loan policy by increasing the interest rate by 1 percent, and, obviously, the macroeconomic assumptions behind this will be quite different. In particular, that’s because the Budget Economic and Fiscal Update yesterday set out what the macroeconomic assumptions were, obviously, for the Budget around lower productivity, unemployment, etc.

But because this is applicable to overseas borrowers, I’m just wanting to understand the macroeconomic assumptions and factors that the Minister or his officials took into account in relation to this, and what that means around the estimated increase, because the fair value is quite sensitive to changes to a number of underlying assumptions, and I know it’s quite difficult to assess it, which is why it’s quite a big undertaking for there to be a valuation of the student loan scheme, and that valuation of the student loan scheme is actually quite an exercise for the actuary that has to do it. But some of the judgments include the future income levels of overseas-based borrowers, so I’m keen to understand the Minister’s reasoning as to how they got to the estimated increase and what the assumption was around their judgments for the future income levels.

The repayment behaviour: so this is quite an important factor, because if you’re going to be increasing the base interest rate, what assumptions have been put into the estimated increase in the fair value of the scheme, given that repayment behaviour may be disincentivised for overseas-based borrowers to pay this because the interest rate has gone up, and inflation, not just here in New Zealand but overseas, is higher. So what is that repayment behaviour? How does that interact when you’ve increased the base rate here by 1 percent, and, obviously, there are the macroeconomic economic factors that I’ve talked about, such as inflation and discount rates.

So I’m really keen to understand that from the Minister, because there is no regulatory impact statement. It might be difficult to find it within the Supplementary Estimates. It could be an evaluation for the student loan scheme that is yet to come, and I understand that is a big undertaking by the actuaries who have to do that for the Crown accounts. What is the estimated increase in the fair value of the loan? Thank you, Minister.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. The fair value increase as a result of the change in the interest rate is $20.5 million, and that will flow through as a result of the increase by 1 percent.

Prior questions in regards to the increase in interest on loans and having it be referred to as a tax is simply just not the case. When you borrow money, you pay interest, and when you increase the interest rate on that loan to pay someone else, that’s not a tax. So, just for clarity, a couple of the members were sort of drawing that conclusion, and it’s not one based on fact.

CATHERINE WEDD (National—Tukituki): I move, That debate on this question now close.

CHAIRPERSON (Maureen Pugh): I’m not going to put that question, because I think there is still some detail that could be extracted, but it’s getting quite thin.

Hon Dr AYESHA VERRALL (Labour): Thank you, Madam Chair. An area of importance to the health sector is the number of highly trained people that we have working overseas. Many of our young doctors undertake training overseas doing fellowships, as I did, in other jurisdictions in order to bolster their qualifications before ultimately coming back home to New Zealand. Just last week, we met the president of the New Zealand Medical Students’ Association. She reported she had $140,000 of student loan debt before she even graduated. Now it would be normal or even desirable for people in her situation to spend some of her training overseas, and we’re learning today that additional burdens of repayment are going to be put on those young doctors.

I want to ask the Minister what modelling has been done and what advice has been received on the likelihood of our talented young people returning home when they face higher penalties in terms of student loan debt repayments, should they do so? We have over 1,000, or perhaps 1300 specialist vacancies in our hospitals and we have multiple junior doctor vacancies at our hospitals, and part of what’s contributing to the junior doctors being on strike at the moment is the high workloads that they face. For these reasons, I want to know about any impacts on, particularly, strategically significant workforces that this student loan additional repayment burden is going to have.

Hon SIMON WATTS (Minister of Revenue): Well, I’m glad the member Ayesha Verrall has realised that one of the opportunities that we do have is to encourage our doctors back to this country, and one of the good things about the student loan scheme is that when they come back to New Zealand from overseas and have been here longer than six months, they don’t pay any interest on their loan. So there’s a really good incentive for the health system in terms of workforce to come back to New Zealand, set up roots, and work here in the health system, because you won’t pay any interest on your student loan when you’re back home here in New Zealand.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Madam Chair. I’m looking forward to the Minister answering my questions about IRD’s powers to recover what he has said is 90 percent of the student loan debt, and the questions of my colleague the Hon Barbara Edmonds about the IRD’s ability to do this and whether he has sought advice on this, because given his last answer, we must be expecting a huge uptick in IRD’s ability to reclaim that debt, given that in the financial year ending June 2023, they only managed to recover $16,000 of it. He must have some new tricks up his sleeve, and I’m really interested in him answering the questions that I put to him, which he hasn’t answered for the committee.

But I want to ask a new line of questions to the Minister. The first is: does he agree with his colleague the Hon Penny Simmonds, who said on 30 May that “The late payment interest for overseas and New Zealand based borrowers”—and New Zealand - based borrowers—“will also increase by 1 percent.” The second question, of five that I have about that, is where that is in the bill. Thank you.

KATIE NIMON (National—Napier): I move, That debate on this question now close.

CHAIRPERSON (Maureen Pugh): The question is that debate on this question now close.

Dr Lawrence Xu-Nan: Point of order. Point of order.

CHAIRPERSON (Maureen Pugh): Those of that opinion—

Dr Lawrence Xu-Nan: Point of order.

CHAIRPERSON (Maureen Pugh): —will say “Aye”; to the contrary “No”. When a vote is under way, we do that in silence.

Dr Lawrence Xu-Nan: I’ve been calling point of order, sorry, Madam Chair. It’s just that we have an amendment that hasn’t been mentioned at all by my colleagues.

CHAIRPERSON (Maureen Pugh): We’re putting the vote now.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

CHAIRPERSON (Maureen Pugh): The question is that Arena Williams’ amendments to clause 44 be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendments not agreed to.

CHAIRPERSON (Maureen Pugh): The question is that Camilla Belich’s amendment to clause 44(2) be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendment not agreed to.

CHAIRPERSON (Maureen Pugh): The question is that Francisco Hernandez’s amendment to delete clause 44 be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendment not agreed to.

CHAIRPERSON (Maureen Pugh): Arena Williams’ amendment to delete clause 44 is out of order as being the same in substance as an amendment previously not agreed.

A party vote was called for on the question, That Part 5 be agreed to.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Part 5 agreed to.

Clauses 1 and 2

CHAIRPERSON (Maureen Pugh): Members, we now come to the debate on clauses 1 and 2, the title and commencement.

JAMES MEAGER (National—Rangitata): I move, That debate on this question now close.

Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Madam Chair. I just find that extraordinary that the first thing a member of the Government can do is stand up and seek a closure without giving the Opposition so much as a look-in. It just reflects very poorly on this Government.

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

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

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

Hon Dr DUNCAN WEBB: No, have a look at the legislative design—

Hon Members: That’s a leadership tie.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

TOM RUTHERFORD (National—Bay of Plenty): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Arena Williams’ tabled amendment to clause 1 to insert the words “OE Tax” be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendment not agreed to.

CHAIRPERSON (Maureen Pugh): The question is that

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

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Clause 1 agreed to.

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

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendments not agreed to.

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

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendments not agreed to.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Clause 2 agreed to.

Bill to be reported without amendment.

House resumed.

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

Motion agreed to.

Report adopted.

SPEAKER: This bill is set down for third reading immediately.

Third Reading

Hon SIMON WATTS (Minister of Revenue): I move, That the Taxation (Budget Measures) Bill be now read a third time.

I want to thank the members of this House for considering and debating this bill under urgency. The high cost of living is one of the most pressing issues here in New Zealand today, and we know that Kiwis are doing it tough. That is why this coalition Government has delivered this important Budget bill, because it delivers responsible tax relief to hard-working New Zealanders who are trying to make ends meet in the face of ever-increasing inflation.

The bill is being considered under urgency because delivering that tax relief is a matter of urgency. Kiwis need support now more than ever, and we need to ensure that hard-working Kiwis are keeping more of what they earn. We are doing that by increasing the bottom three personal income tax thresholds, which will allow people to make sure they keep more of what they currently earn before moving into higher income tax brackets. Many New Zealanders have been pushed into higher tax brackets due to inflation and wage growth, meaning they have been paying and are paying more and a greater share of their income in tax. This is not fair. They earned that money and they should be able to keep more of it.

A median-income worker—the average rate that they are paying has increased from around 15 percent in 2011 to around 21 percent today. Tax rates that go up as income rises lower the real value of wage increases that people receive. This results in lower incentives to work, save, and invest over time. Without increasing the tax thresholds periodically, bracket creep occurs and financial incentives to work decline. It has been nearly 14 years since tax reduction has been provided, yet inflation has steamed ahead. This is not what we want for New Zealand and our hard-working Kiwis. So we need to take action to address this as a matter of urgency.

That is why we are debating these changes under urgency, and that is why the personal income tax changes and threshold changes will have effect from 31 July 2024, because New Zealanders need that support now. Normally such changes would have effect from 1 April, being the beginning of the income tax year. I know that bringing that change in part-way through the year may cause inconvenience to some, but Kiwis have been waiting 14 long years for this. Every day we delay, people are slipping further and further back economically. So it is important for us to ensure that we deliver responsible tax relief for the squeezed middle sooner rather than later and waiting for the start of the next tax year.

We are reducing the compliance costs and the administrative burden for this change by introducing some of those transitional measures outlined in the bill. The bill, therefore, proposes that the current tax thresholds will apply from 1 April to 30 July 2024 and the proposed thresholds will apply for the remainder of the tax year. To account for the two sets of thresholds being applicable in one tax year, Inland Revenue will need to use composite rates. These are an average of the current and proposed rates and will be applied across the entire year to determine a taxpayer’s annual tax liability. This will be used for Inland Revenue’s end-of-year square-up calculations, which assess a taxpayer’s income against the amount of tax paid over that income tax year. These changes are proposed to help reduce compliance costs associated with taxpayers in making the changes part-way through the tax year. The inconvenience of making a change part-way through the year is outweighed by the benefits they provide to people who are working hard to make ends meet.

In making these changes to the personal income tax thresholds, we are also making consequential changes to other tax types to take into account the changes being made to the income tax thresholds. This bill, therefore, proposes consequential changes to the resident withholding tax, fringe benefit tax, the employer superannuation contribution tax, the retirement scheme contribution tax, and the tax on portfolio investment entity income.

The bill will also restore dignity and the incentive for personal endeavour. People should always be better off in work than on the benefit, but, for people on the lowest incomes, that principle has been eroded. We are, therefore, proposing to extend the independent earner tax credit by lifting the upper income threshold from $48,000 to $70,000. This will help an additional 420,000 people by $20 a fortnight. Increases are also being proposed by this Government for the Working for Families tax credits. These are the in-work tax credits which will see 160,000 families receive up to an extra $50 per fortnight, and the minimum family tax credit which will see 3,000 of those families receive an extra $54 a fortnight. Together, the changes outlined in this bill will see people better off.

Our tax relief package that we have outlined in this bill will increase the take-home income of 83 percent of New Zealanders aged over 15, and over 94 percent of households—1.9 million Kiwi households, on average, will be better off by $60 per fortnight. More than 3.5 million New Zealanders, on average, will be better off by $32 per fortnight. FamilyBoost will also help an estimated 100,000 families with young children. Households with children, on average, will be better off by $78 per fortnight.

This bill will make a real difference to the people of this country. It is a bill which makes well-judged use of taxpayers’ dollars. It encourages competitive enterprise and rewards hard-working Kiwis for their achievement. That is what our economy and New Zealand needs. This is an excellent taxation bill. I would like to thank colleagues in Treasury and Inland Revenue officials for all their work in providing policy advice and for drafting this bill. As the Minister of Revenue, it gives me great pleasure to commend this bill to the House.

Hon Dr DEBORAH RUSSELL (Labour): This is a sneaky bill. It’s a sneaky bill that, on the face of it, has some tax threshold changes which will make a bit of a difference to some New Zealanders, but in the detail of the bill, as we uncovered through the committee of the whole House stage, there are some fish-hooks, some wrinkles, some traps, some issues that the Minister couldn’t give us the modelling for or the decisions for. I want to go through that so that people are not misled by this bill.

So let’s start with the changes to the tax thresholds. The Minister of Finance was at pains to tell us in recent weeks that the changes made to tax thresholds would be meaningful and would make a difference. I tell you what’s meaningful: the massive job cuts that are going on across the public sector, with 5,000 people out of work. Here’s what’s meaningful: the families who are losing access to prescriptions because that prescription charge is going back on. Here’s another thing that’s meaningful: the families who are paying increased public transport costs, so that’s going to eat up any changes to the tax thresholds. Here’s another thing that’s meaningful: the staggering increases in rates because that Government has refused to engage with meaningful water reform.

People are supposed to be grateful because in the face of these stupendous increases to costs, there is a small change in the tax thresholds. I suspect that when the reality of these changes appears and the amount that comes through, perhaps in August—we couldn’t be sure, because the Minister wouldn’t guarantee that employers could do it—I think people are going to look at what happens in their pay packets and they’re going to say, “Is that it? Is that it?”

It’s going to make no real difference to them. Here’s why: there are the changes in the tax thresholds, but then the majority of the weight that is lifted in the alleged amounts that families will get is done by the childcare rebate. That’s the biggest change that’s coming through. Again, on the face of it, it looks like a good measure—on the face of it. But when we dug into it during the committee of the whole House stage, we found that there were all sorts of problems.

We found that, instead of the rebate from childcare just blowing through the system on a fairly automatic basis, families were going to have to collect receipts from childcare providers, send them into IRD, and then get a refund into their bank account in an incredibly clunky process. I recall being the mother of young children, juggling getting the kids to and from childcare while I was managing my job, managing all the juggle with my husband. It took a lot of work. Adding an administrative burden to that seems simple to those who sit in a job where all sorts of things are done for them, but, for busy working families, that is an administrative burden. We know it’s even more of an administrative burden for our Māori families, for our Pasifika families, for our rural families. They have given with one hand but made it so difficult for the families who are going to benefit from it.

Then we found out something really interesting about that childcare rebate: that it abates. When the family income is $140,000, the rebate starts to abate and then it fully abates by the time the family income is $180,000. That is an incredibly steep abatement range. What it does is it increases people’s effective marginal tax rates.

So I asked the Minister and I said, “What is the effective marginal tax rate for someone who perhaps earns $100,000, paying a tax rate of 33 percent at that rate, maybe has a student loan, and then is going to get this childcare rebate abating as well, by the time they’re at $140,000?” He couldn’t tell me. He had not done the modelling on the effective marginal tax rates. It was a lazy move and it should have been done. All it would have taken is sitting an official down with a spreadsheet for an afternoon. They could have done it, but they had not done it, so we don’t even know what the impact of this is going to be on individual earners.

Let’s carry on to the tax credits. So there are changes to the minimum family tax credit and the in-work tax credit. Again, on the surface it looks pretty good—

Hon Member: $50.

Hon Dr DEBORAH RUSSELL: —and, of course, it will help some families—

SPEAKER: Look, that’s enough.

Hon Dr DEBORAH RUSSELL: —but there is a massive fish-hook in there which the Minister did not address. I refer the House back to the regulatory impact statement and the crossover between the minimum family tax credit threshold and the Working for Families abatement threshold. I’ll read it out: “As the minimum family tax credit threshold increases annually, it is … forecast that on 1 April 2027 it will overlap with the Working for Families abatement threshold.” This will mean that Working for Families customers will face effective marginal tax rates of well over 100 percent. That is a problem that the Minister and the members on that side of the House have not grappled with. They have set up a situation where people are going to face an effective tax rate of over 100 percent. It’s a problem they need to deal with. That was a lurking problem in this bill.

Then we get on to Part 4 and the changes to the fringe benefit tax (FBT), employer superannuation contribution tax (ESCT), and portfolio investment entity (PIE) rates. That was one of the sneakiest changes of all—one of the sneakiest changes of all. Those FBT and ESCT rates are set in relation to personal income tax rates. The cost is borne by the employer, but the rates are set in relation to personal income tax rates. Those changes to FBT and ESCT rates will not come into effect until 1 April next year. So from 31 July this year until 1 April next year, employers will be over-taxed on FBT and ESCT. The alleged party of business has put this in place—the alleged party of business.

Then the Minister told us that this was because the compliance costs would outweigh the tax. So, in effect, the Minister, on behalf of businesses, made the decision for them. He made the decision that employers would choose to pay more tax instead of incurring more compliance costs. Here’s the problem with that: in the FBT regime as it stands, there is a choice for employers. They get to choose whether or not they will pay some more compliance costs, do some more calculation, do some more work, or pay more tax. The concept of a choice is already there, but the Minister has denied that choice to businesses and he has just laid some extra tax on them. The alleged party of business has done that. I say that that is not a business-friendly move.

Then there’s the PIE rate, and this is the most disgusting change of all. Instead of aligning the PIE rates for low-income earners with the personal income tax thresholds, that party is going to over-tax low-income savers on their investment returns. That party is taxing our lowest-paid workers more on their KiwiSaver—that is absolutely outrageous. Just to top it all off, right at the end of the bill, they whack another 1 percent on overseas student loan borrowers. Now, that might not sound like a lot, but there are already huge burdens for young people who are trying to travel, trying to work, trying to get their careers going, and now they are loading extra interest on them, putting some more costs on.

That’s why I say that this is a sneaky tax bill. They are touting it as offering people more money in their back pockets, but as they allegedly give with one hand, they take, take, take with the other. They undermine the way we live in New Zealand, they undermine the support we give to each other, and the worst impact of this will be on low-income earners. That is an outrageous thing to do and I cannot believe that they would be proud of this. We could have teased these problems out in a proper select committee process, but now we can’t even address them. It is outrageous that they have done that. It’s outrageous that it has been done under urgency, and it is outrageous that the time for the debate was cut short. This is an outrageous bill and the National Government should be ashamed.

SPEAKER: Just before I call the member, can I remind members that this is a third reading. It’s not a discussion across the House, and interjections should be as rare and reasonable as possible.

CHLÖE SWARBRICK (Co-Leader—Green): E te Māngai, tēnā koe. Tēnā koutou e te Whare. Here’s what this bill does: it gives very modest tax cuts to obscure the fundamental unfairness of our economy and our tax system. Just to lay that out and lay it there for all who may be following along at home: we had, about a year ago, a report from the IRD which told us that the top 311 families in this country hold more wealth combined than the bottom 2.5 million New Zealanders. [Interruption]

SPEAKER: No, sorry. I don’t mean to interrupt the member, but discussions need to be quiet and not audible. Please carry on.

CHLÖE SWARBRICK: Thank you, Mr Speaker. To that effect, the subsidiary papers from both Treasury and IRD spoke to the fact that this is not an accident; it is a consequence of a tax system that sees those at the top pay an effective tax rate less than half of that of the average New Zealander.

I recall a few years ago, actually, in this debating chamber, as we were debating, I believe, the introduction of the new top tax bracket at $180,000, that I had an interjection, a heckle, thrown at me from the Hon Andrew Bayly, who said that there is such a thing as legitimate tax avoidance. That has rung in my head every single time that we have come to debate tax in this House, because that is what we do here. We set in place rules that enable people—particularly, at present, those at the top—to arrange their affairs in such a way as to avoid paying their fair share of tax.

What was one of the first things that this Government decided to do—under urgency, no less—just before Christmas? Well, it was to repeal the underlying legislation that enabled that reporting which gave us that data which showed us how unfair the tax system is. It’s almost like they’ve got something to hide. So the question needs to be: what cost do these modest tax cuts come with? The reality is that they come at the cost of more expensive public transport across New Zealand; they come at the expense of prescription fees for New Zealanders; they come at the cost of lower-quality school lunches. If the trajectory of decisions from this Government follows conservative decisions in the past, we’ll, effectively, be starving the school lunches programme to be able to, in future, argue that it is ineffective and then cut the funding for it. Mark my words.

These tax cuts also come at the cost of cancer drugs, which the Government also campaigned on and promised would be delivered, but they have decided to fund these trickle-down tax cuts instead. These tax cuts cover the cost of climate action. I find no tiny bit of irony in the fact that the revenue Minister also happens to be the Minister of Climate Change proposing this, knowing that it comes at the cost of the integrity of the emissions trading scheme—i.e., the very system that this Government is placing all of its eggs in the basket of in order to drag down our emissions curve. It also comes—these trickle-down tax cuts—at the expense of pest-free Aotearoa.

It’s not too hard to fire up the shredder, but it is difficult to confront the dual crises of inequality and the climate crisis and to deal to them with evidence and the policy that is necessary to confront both of those crises. The sentiment that I have heard out there from New Zealanders—and all of us would have seen news reports—is that these tax cuts for most people, yeah, they feel better than nothing, but that they mean absolutely nothing in the face of costs going up. So this Government is also simultaneously making decisions to increase costs, notably by some of the decisions that they’ve made in these trickle-down tax cuts. That $2.9 billion tax cut for landlords—guess what! Our central bank says that that is only going to serve to drive up the cost of housing. We also have some analysis from Treasury that shows that this Government’s decisions are going to increase the costs of rent.

It’s also going to come at the cost of our long-term challenges, not only the climate crisis but the $200 billion hole that we face in our infrastructure deficit. That is not even starting on the child poverty report, because I think this is a really, really important question to put across to members of the three Government parties today. I’d encourage them to look into this four-page mockery of a child poverty report and to look to the final page, on page 4, where it shows us a graph—the second graph there—of after-housing costs and the measure and the metric for child poverty as a result of the decisions that this Government is making, namely their tax changes; their trickle-down tax cuts.

What this shows us—and I really, really, really hope that the Government members reflect on this because we all often say when we’re having debates in this place that the reason that we come here is because we all, apparently, believe in the same things; we all, apparently, believe in the same values; we all, apparently, believe in ending child poverty; we just disagree about how to get there. What this graph bears out on page 4 of this child poverty report is that, as a result of Government decisions, more children will be in poverty as a result of the Budget that they are passing and the legislation that they are passing through under urgency, of which these trickle-down tax cuts are a part.

Not only that but they’ve also decided to slip in increases for costs to those who go overseas with student loans in the form of their interest rates. They’ve also—and this is a really interesting one that was teased out through committee of the whole House—through their FamilyBoost measure, can in no way, shape, or form guarantee that the gap is not going to be filled with for-profit providers simply price gouging. I’d also note, ACT Party members, that your deputy leader decided to, throughout the election campaign, rail against this FamilyBoost policy for exactly that same reason. That can be found in the media archives.

Today, 63,000 New Zealand children woke up in poverty. What these trickle-down tax cuts are going to do, amidst the backdrop of a Budget which continues to entrench a deeply unfair and unequal economy, is make more children poor. I find it really interesting as well, if we flick through to page 2 of this incredibly light child poverty report: it says here in the second paragraph under the Government’s approach to child poverty, a key driver of child poverty is living in a benefit-dependent home. Causation is not correlation and correlation is not causation. Indeed, there absolutely is a correlation between the fact that children living in poverty do overwhelmingly live in benefit households. But the reality of the situation is that the reason that those children are in poverty is because we force those in benefits to live in poverty.

So I’d just ask us to unpack, actually, the very notion of child poverty, which is a really interesting rhetorical device used by those in the social sector to campaign for our country to care about poverty as an issue. Because it just so happens to be the case that we don’t tend to empathise with adults in poverty; it seems to be contrary to the notion of the hard-working New Zealander—every politician’s favourite voter—because it is the case that we are quite comfortable in this place, under successive Governments, punching down and blaming people for living below the poverty line.

At the end of the day, all this Taxation (Budget Measures) Bill delivers for us is trickle-down tax cuts that continue to entrench a deeply unfair and deeply unequal society and economy, which the Government knows and has the data and the evidence—that they promised us they would care about—will put more children in this country into poverty as a result of their decisions. Frankly, I think that that is something to be ashamed of.

I would also reflect on the fact that the finance Minister, in many of the papers released alongside the Budget, cherry-picked statements from the IMF and the OECD in order to rationalise Budget decisions. But she intentionally neglected the top-line ask—the plea—from both of those international entities for our Government and our country to sort out our tax system; to finally, once and for all, put a tax on capital gains so that we level the playing field, so that we stop seeing money ploughed into unproductive assets, namely housing.

Unfortunately, what we see here today in this Budget from this Government is no ambition, no aspiration, next to no meaningful evidence base for anything that they’re doing. In fact, if they were to look at the evidence, they’d see that it’s making those in this country far worse off. For that reason, the Greens cannot support it.

TODD STEPHENSON (ACT): Thank you, Mr Speaker. I rise to talk to the Taxation (Budget Measures) Bill. Firstly, before I talk about the bill, I just do want to congratulate the Hon Nicola Willis on handing down the Budget. This is my first opportunity to speak since the Budget was delivered yesterday. I do want to congratulate her on delivering the Budget and working constructively across the coalition to actually put it together.

I also want to acknowledge my leader, actually, one of the Associate Ministers, David Seymour. I know he diligently worked on the Budget, particularly around the savings measures. These tax cuts that we’re going to talk about have been made possible by actually doing a line-by-line review of Government spending, and taking out a lot of waste. So I think that Kiwis wanted us to make sure that the Government is actually spending money on things that can deliver outcomes, getting rid of wasteful spending, and that’s what this coalition has done. I know Mr Seymour has done his part in delivering that.

We’re very happy, in ACT, to be supporting these tax changes. As Minister Watts said earlier, it’s been 14 years since we’ve delivered any tax relief in this country. There’s this handy little brochure here which actually points out that 83 percent of New Zealanders will benefit from the changes that we are going to pass today. Rather than being trickle-down, this is actually direct tax relief. People are getting to keep more of the money that they work hard for every day—they’re going to keep more of that.

It is true that ACT actually had some different tax proposals. We would have probably liked to have seen a simpler tax system. But this is heading in the right direction. I want to also acknowledge the finance Minister did acknowledge that ACT has other proposals, and we’re going to continue to work constructively in Government to have those proposals worked on, and we will be continuing to execute that.

I want to refer to a couple of things that have transpired in the debate. Chlöe Swarbrick talked a lot about a few things. One was interest deductibility and unrealised gains. My colleague Andrew Hoggard is an economist and he’s very happy to sit down with Ms Swarbrick and talk about what unrealised gains are and why it is inappropriate to actually do a calculation on those, and also how interest deductibility works and why that is an appropriate business expense.

I also want to address the Hon Deborah Russell. I actually agree with the Hon Deborah Russell on something. A lot of acronyms have been thrown around—FBT, PIE, the IETC; lots of acronyms. The Hon Deborah Russell is right: our tax system should be simpler. We shouldn’t need all these acronyms. We shouldn’t need all these carve-outs. There should be a simpler tax system. Again, we’re happy to work with the Hon Deborah Russell, exploring that as ACT’s proposals continue to percolate through the Government.

In the meantime, I just want to finish by saying that this is going to give some relief to the cost of living pressures that Kiwis are facing. It’s going to return some money to the back pockets of Kiwis. We’re also attacking Government spending, which, again, is going to bring pressure down and we’re going to see this economy turned around, more people in jobs, growth, and that’s what we’re about in ACT. We want to grow the economy so that every Kiwi has a great opportunity to grow up, earning the kind of income they want, doing the kind of job they want, raising the family the way that they want, and actually contributing to our society. So I commend this bill to the House.

TANYA UNKOVICH (NZ First): Once again, I rise on behalf of New Zealand First in support of the Taxation (Budget Measures) Bill, and I’m going to keep it brief. This bill is going to make a difference in the lives of many hard-working New Zealanders, and that is why we will continue to deliver on what we campaigned on. That is why I’m very happy to commend it to the House. Thank you.

Hon Dr Duncan Webb: I seek the Māori Party call, Mr Speaker.

SPEAKER: Just one moment—thanks very much for your advice, but I’m in the middle of ruling, so if you just let me do that before you offer your opinion, I think we’ll make better progress. So we have a similar split in the 10th call, which is Labour and National speaking; it’s Labour and Te Pāti Māori on this one. I think if we were to say that if Labour swapped in this place with Te Pāti Māori and took a 10-minute call now, that would most likely leave a 10-minute call for National at 10. So with a 10-minute call—and I hope this doesn’t prove too difficult or too much strain, but I’ll call on the Hon Dr—

Ricardo Menéndez March: Point of order. Just confirming that the sixth slot will still be a split call, with the Green Party having a five-minute second call.

SPEAKER: No, the Green Party doesn’t—oh, the Green Party has the sixth one. Oh, I see the problem. OK, in that case, the Green Party should’ve taken the first five minutes in this. So, look, it’s messy because the party hasn’t got a representative here for a speaker at the moment—and that’s not implied criticism or otherwise. I think, in that case, we’ll take a five-minute call from Ricardo Menéndez March.

RICARDO MENÉNDEZ MARCH (Green): Thank you, Mr Speaker. This bill has been called “sneaky” by some, and I think, actually, it goes beyond being sneaky; it’s a bill that is cruel, and it speaks to the values of the National Party and its coalition partners. This is a trickle-down bill that ignores those doing it the toughest, that gives cake for those at the top, and breadcrumbs for everyone else, and people deserve far more than those breadcrumbs. We should not settle for people having a handful more dollars each week when we know we can make it a political reality to ensure that everyone can live well and not in poverty.

It was really telling in this third reading debate when the Minister, the Hon Simon Watts, talked about hard-working Kiwis as the people who this bill was targeting, but, actually, some of the people least benefiting from this bill and, in fact, left out entirely in portions of this bill are caregivers who do caregiving full time, who won’t be receiving the boost to a bunch of income top-ups such as the in-work tax credit, for example, because this Government, and successive Governments, have determined that full-time caregivers are not doing so-called work. The Green Party says an end to this nonsense argument that caregivers are not doing work. Caregiving is work. It’s time for the Government to stop putting it about to all the labour that comes across our economy that actually sustains all of us and yet is not considered important because it is not under an employment agreement. Caregiving, volunteering—and the reality that people deserve the dignity of living well.

This bill has to be taken in the context of the cuts to all the other subsidies that will make life more expensive. The reality is that this bill is coming in the context of subsidies for transport being ended, resulting in higher transport fares for people; an end to the subsidies for prescriptions, which will make access to medicines more expensive. It comes with the introduction of greater powers for landlords that will make it easier to evict people, putting people into situations where they’ll need to access emergency housing in distress. So, while they may be celebrating the breadcrumbs that they’ve thrown out to our communities, they’re also making life more expensive for the majority of people. But it is absolutely no surprise. This Government never claimed to be on the side of the many; they’ve made it abundantly clear that they’re here for the wealthy few. The Green Party will continue fighting to ensure that we have a Government that makes the tough political choices to actually end poverty, to tackle the climate crisis, and to deal with our biodiversity crisis.

The Prime Minister is not right when he talks about the decisions in this Budget being tough. In fact, they just continue what successive Governments have done, which is to enable inequality to continue to increase. We’ve seen report after report showing how child poverty measures will stagnate—that this Government isn’t taking the tough choice of ending poverty once and for all. And my colleague Chlöe Swarbrick was right in calling out the nonsense from Government reports that talk about how one of the key determinants of child poverty is living in a household that relies on a benefit, because it is a political decision to set those benefits below the poverty line. People did not grow up in poverty out of inertia; they grew up in poverty because the Government and successive Governments of blue and red stripes have set benefit levels way below the poverty line. They refuse to tax the wealthy few to ensure that we can lift people out of poverty and have refused to recognise the inherent right that people have to a life with dignity.

This Government has also turned its back on disabled people, many who live on income support, many who will be some of the least proportionately benefiting groups out of these tax cuts. The reality is that you can’t fund Whaikaha and then, on the other hand, remove supplements to minimum wage extensions and exclude disabled people on income support from many of the elements of this bill. Our communities deserve far more than a Government willing to hand the future to those already doing it well and the wealthy few. We deserve a Government that is committed to making the tough choices of ending poverty, tackling the climate crisis, and not continuing with this proven trickle-down economics that has only increased inequality and made life worse for the majority of people.

SPEAKER: Just before I call the next member, we have a situation where a party has indicated they wish to share a split call. That is allowed, except that it is on the basis that it is notified. It wasn’t notified. So, in order to maintain a degree of fairness about that, we will have the splits as they are determined already, excepting that the Māori Party call on this split goes to the Hon Dr Duncan Webb.

Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you for the indulgence, Mr Speaker.

This Taxation (Budget Measures) Bill is a centrepiece of this Government’s Budget. What it amounts to is a borrow-and-burn Budget. These tax measures are costing the Government $3.6 billion. Where’s it coming from? Where is the $3.6 billion coming from? This Government is now borrowing—borrowing—more money than any other Government before. The debt—there’s going to be $9.2 billion in financing costs. The suggestion that this Government is not borrowing for its tax package is absolutely laughable. There are two sides of the ledger: one of them has got “borrowing” on them, one of them has got this tax package on the other. The $3.2 billion has to come from somewhere. If you didn’t spend $3.2 billion on this tax package, that’s $3.2 billion that you wouldn’t have to spend.

We know what’s going to happen. I’ve seen the Minister of Finance say with a straight face, an expressionless face, that this won’t be inflationary. But the fact is that when you put $3.2 billion into the economy, it is going to be spent. That is economic vandalism. That is borrowing and burning. What’s more, they say, “Don’t worry, we’ve found money. Somehow, we’ve magicked up some money by doing things like cutting unnecessary programmes.”—stealing from the climate fund. You know, the country is burning, and you’ve just thrown some gasoline on it. It’s absolutely outrageous. “Oh, we’ve found something to cut. Let’s take a sandwich out of the kids’ school lunches.” You know, that’s basically what they’ve done. Those school lunches—I hope everyone in this House has gone and seen them—are good, healthy, balanced lunches with a with a range of food. Not anymore. It’s going to be a Marmite sandwich. That’s not a healthy school lunch—

Carl Bates: My kids love them. A good Marmite sandwich—my kids love them.

Hon Dr DUNCAN WEBB: His kids love them—that’s what we’ve got. You know, that’s great for you, but what I aspire to is giving kids lunches which are fully rounded and nourishing. This Government is cutting lunches in half. [Interruption]

SPEAKER: Yeah—that’s enough. Just carry on; we’ll just have a bit of quiet. Thank you.

Hon Dr DUNCAN WEBB: And, of course, free prescriptions. This is how he finds money—a mostly five-buck surcharge. Those members—that Government—wants to cut that five-buck surcharge, knowing that our most needy New Zealanders will walk past the pharmacy because they haven’t got the five bucks to pay for their medicine, to pay for their antibiotics for their lung infection, to pay for their pain medication—all of those things that not only make their lives better but also make them less costly to the New Zealand Government in the long run. So I am surprised and appalled that that is the approach being taken.

Chlöe Swarbrick made a good point. Child poverty indicators—if you have a look at the child poverty report that came out, which is premised on this Budget and these tax measures, the child poverty measures are going up. Child poverty is increasing. That is the choice that this Government is making—that children will be in material hardship. They choose that because they want to buy some lollies with the grocery money, effectively. They want a sugar hit, and that’s what they’ve done with this tax package. We know what child poverty leads to—we know. There’s actually a reason why they’re spending hundreds of millions of dollars building prison beds whilst child poverty is going up—because the two things are linked.

So this is a Budget which isn’t fiscally responsible, which is needlessly increasing debt, which is inflationary, but what is worse is that it’s harmful to our most vulnerable New Zealanders. It’s a shameful Budget, and it’s a dark day where I stand here and watch that Government vote in favour of it. Thank you, Mr Speaker.

STUART SMITH (National—Kaikōura): Thank you, Mr Speaker. As the nearly quarter of a million hits on the tax calculator website have shown today, Kiwis are very eager to see this Taxation (Budget Measures) Bill be passed. So it’s with great satisfaction that I commend it to the House.

Hon Dr AYESHA VERRALL (Labour): It’s a pleasure to—[Interruption]

SPEAKER: Sorry, before you start—we’ll start you again. Look, as I said earlier, this is not a conversation; rare interjections only. I call on the Hon Dr Ayesha Verrall.

Hon Dr AYESHA VERRALL: Mr Speaker, thank you. It’s a pleasure to follow that fulsome contribution from the chair of the Finance and Expenditure Committee. This bill enacts elements of the Budget that takes New Zealand backwards. It borrows billions for the tax cuts that are contained in this bill. The tax threshold changes will result in far less for New Zealand families than was promised. The question that all New Zealanders are asking today was answered by Andrea Vance in The Post today. The question was, “Was it worth it?” She says, “For a pensioner couple, getting $4.50 a week … probably not. The minimum wage earner pocketing 30 cents, surely not. The singleton, earning $55,000 a year, receiving $51 a fortnight, arguably no. [For] The patients relying on funding for 13 new cancer drugs, almost certainly not. And for future generations saddled with $50 billion of debt, definitely no.” It is clear that many things that are good about life in New Zealand are being sacrificed on the altar of saving Nicola Willis’ political credibility because she committed to tax cuts. Commentary in the New Zealand Herald today says, “There is absolutely no doubt”—says Matthew Hooton—“no doubt that New Zealand is borrowing for tax cuts.”

I want to touch on whether or not this is worth it, and I want to focus on one particular policy initiative: the free prescriptions. Now, that was a policy brought in at last Budget that had tremendous impact in New Zealand, keeping people out of hospital, making sure that the many people who have to forgo their medicine because they cannot afford it, who otherwise end up in hospital for treatment, can get the treatment they need. There are many people who need multiple prescriptions at a time and they depend on that support. The pre-election promise from the Government was that that policy would be used to fund cancer medicines. But what happened doesn’t add up. No, they’ve scrapped the free prescriptions and they’ve also not followed through on the cancer medicine treatment.

Another area: free public transport support for working families has been lost. That contributed quite a bit—it can add up to about $25 a week for some families when they’ve got kids who were getting the free public transport subsidy. That was meaningful impact on the cost of living. Similarly, people’s hope for the better future, for being able to purchase their first home, lost with the cancellation of the First Home Grant. So it seems that this Government is taking with one hand and giving a few scraps in return, and certainly no meaningful action for those that they call the “squeezed middle”. But there’s more to what’s lost in this Budget than just the ins and outs on the daily budget sheet for the average family; there’s also the services that many New Zealanders depend on. This Budget was funded, in part, by the loss of 5,000 jobs across New Zealand’s Public Service. In health, we’ve lost the people who monitor whether our health system is doing a good job or not, we’ve lost the people who will be there to protect us in the next pandemic, we’ve lost advice, and we’ve lost people who work on regulation—things like protecting kids from vaping—and on and on and on.

In education, people who see if those school lunches are, in fact, nutritious—they might provide some inconvenient advice—they’ve been fired. People who protect the borders of our communities, in Customs, keeping meth and other drugs out of our country, and people who keep harmful pathogens out of the community at biosecurity—they’ve been fired in order to fund the tax measures in this bill. At Oranga Tamariki, the people who make sure that the management of children is supported by good legal advice when they’re in State care—they’ve been laid off. There’s been lay-offs at ACC, the agency that helps New Zealanders rebuild their life after an accident—in particular, people at ACC in the injury prevention unit have been fired, meaning that the overall efficiency of the programme is reduced. In the Ministry of Social Development, people have been fired to fund these tax cuts—they’re often the ones transforming the systems that people interface with when they go to get their entitlement. Department of Conservation funding has received a real cut as well as a result of these changes to the tax thresholds, where the only people celebrating are not people; they’re ferrets, because it’s a great day for pests in New Zealand, given all the cutbacks that we’re having to the measures to preserve our environment.

The childcare rebate is a poorly designed piece of policy, though the intent to make sure that parents have support when they’re having their children in care is a good one. The requirement to mean that parents have to pay for their care upfront will be a barrier to many on the lowest incomes accessing the support that is intended to be provided by this bill. It’s a few years since I was a parent of a preschooler, but I remember well the lack of time to do anything for myself, the sleep deprivation, the overwhelm, the household work, the piles of washing, the relationship difficulties that you have when you’re managing all this extra work in your household and your career commitments. Yet the Government decides it’s helping to put a little bit more of red tape and admin in the way of those families as they try and access support. I don’t know why they would design a policy like this in the modern world.

Finally, I want to talk about the changes to the student loans—and this is where the bill gets truly, truly sneaky. This was not canvassed in the run-up to the election that this type of a change would be made. But it is of a piece with the type of initiative that this Government has sought to bring forward to tax people who are not New Zealanders, or at least not in New Zealand. We know that the foreign buyers tax was the Government’s first effort to raise revenue of people overseas, but that was scotched by New Zealand First. The international visitor levy is another one where they’re trying to put more costs on people coming to New Zealand.

And this one has snuck through: the student loan increase in repayments for New Zealanders overseas. Now, this one is on New Zealanders who are overseas who are having to pay back their student loans. For some, it will cause additional hardship and it may well cause our well-trained people not to return to New Zealand. When I think about the situation in our health system where it’s normal for many of our well-trained people to go do a fellowship overseas, get the skills they need, and come back to New Zealand—they’ll be facing additional costs as they seek to do that, and then the barrier to returning to New Zealand where we can use their skills seems even higher. I think this is a concern that that side of the House should take more seriously as we face the highest ever level of immigration from this country.

In the last year, 52,000 New Zealanders went overseas; 39 percent of them are aged 18 to 30—precisely the people who would be impacted by this. We know that they’ll be looking around, looking at the rising projections for unemployment in New Zealand; seeing the country they love go backwards on climate, backwards on race relations; a Government that likes to kick trans kids in the face every now and then if it suits them politically; challenges in homeownership in this country; and putting an additional burden on them in their student loan repayments. What positive agenda does this Government have for those New Zealanders who we would like to return to New Zealand! So this is a “broken promises” Budget. We all remember Christopher Luxon in the leaders’ debate saying that New Zealanders will get $250 a fortnight with the tax changes. Well, this bill shows that it is barely anywhere near that for the majority of families. It shows very little happening for the squeezed middle, and, in fact, there are more costs being put on to people as free prescriptions and public transport subsidies are rolled back.

Also, for seniors—I mean, it was incredible how short the New Zealand First seniors spokesperson’s call was, given that it must be of some embarrassment that seniors will only get $4 a week with these—

Arena Williams: $2.20!

Hon Dr AYESHA VERRALL: $2 each a week. This is a “broken promises” Budget. This bill does nothing to take New Zealand forward; it takes New Zealand backwards. I cannot commend this bill to the House.

CATHERINE WEDD (National—Tukituki): I rise to support this bill because it is all about supporting hard-working New Zealanders to keep more of what they earn. After 14 years, they will finally be getting tax relief on 31 July. So I commend this bill to the House.

SPEAKER: I call the Hon Peeni Henare for a split call.

Hon PEENI HENARE (Labour): Tēnā koe, Mr Speaker, and thank you for the opportunity. I just wanted to address one thing: there are a number of grumbles in the House about some of our colleagues who haven’t been here through the debate. I just wanted to acknowledge this morning the passing of Rawiri Waititi’s father, which is a sad time for him; he’s lost both his parents now in the last six months. So I want to acknowledge him; he will be returning to his marae, Kauaetangohia, in the coming 24 hours. So I just wanted to farewell him. Haere e te matua. Haere, haere, haere.

Now back to our bill that we have in front of us here today. I stand in opposition to this bill. You know, I don’t claim to be a tax expert, but most of our whānau out there just want to know the simple things. They want to know: will they be able to get ahead? They want to know: is the cost of living going to ease so that they can support their families? They want to know that systems are simple in order for them to get on with their daily lives so they can be productive. What I’ve heard throughout this entire debate, and it was a robust debate—and I want to acknowledge the speakers on this side of the House, in particular, who went through this with a fine-tooth comb and challenged the Minister on so many aspects, and couldn’t get an answer.

So let’s paint it quite clear. For our whānau out there, what’s happening today is the tax threshold changes. Everyone has said, on that side of the House, that you’re going to be better off. Well, what’s clear to me—and as I look through those threshold rates, I look and see who’s really missing out. Well, I can tell you, and the regulatory impact statement supports this: Māori are missing out. Pacific peoples are missing out. Families in low socio-economic communities are missing out. They are the ones who need it the most. They need the support the most, and what we’ve heard throughout this entire debate is that that support is being stripped away, “But that’s OK because we’re going to give you a pittance in your pocket!”

Not only that, though, what I heard, in particular, in one part of the debate was “Oh no, that’s all right. We’re going to give it back to you but you have to work for it again. You’ve got to go through the administration of making sure you can get a rebate for a child.” Now, that’s just absolutely ludicrous and absurd. I heard some of those kōrero from the other side of the House, saying, “Oh, well, you know, if they want it badly enough, they’ll go and do it.” This is to my point. Our people want to know that the tax system is simple, easy to understand, so they can get on with their daily lives. That’s not what’s happening here in this bill.

We also talked about a number of other reasons why people are leaving this country. Well, I say, “Gidday, mate!”, because a lot of our people are leaving this country simply because the cost of living burden is just far too great. What was advertised in the entire election was that relief was going to be given to them, they’ll have more in their pocket, they’ll have more to spend in our local economies, they’ll be able to stay here and support their families. Well, record numbers are going to Australia; record numbers are heading to greener pastures so that they can get the necessities of life: better healthcare, better support in education, better support for their families. This bill does not do that for our families out there. It might do it for the privileged, the wealthy few, it does it for the people at the top of the ladder, but it does not do it for the people who need it the most, and that’s the point that I need families out there in our communities, our hard-working families, to get through tonight. That is, it does not support them.

When the tax thresholds come into enforcement, they’re going to look at their pay packet and say, “Well, is that all? Was that worth it? Did we make the right choice at the election?” My point to them is, well, sadly, the election was the election, but they get a choice again in the future. They get to choose whether or not they back better healthcare. They get to choose whether or not they back better education outcomes. They get to choose whether or not the cost of living crisis will be eased so that they can look after their families and they can do all the aspirational stuff that we talk about in this House, where, at the moment, they’ve been stripped of that aspiration.

They’ll have a choice to make in the coming years, and I encourage them to have a good hard look at what’s in this bill, have a good hard look at what was left to them at the end of the day, in their back pocket, and I’ll remind them that it was bugger all. And when they’ve been given a little bit, as my colleague has rightly said, they’ve been given a little something with one hand and I can say that they’ve been punched in the puku with the other, because you might get a little bit more in the pocket, but you’ve got to pay more because subsidies for transport have gone, you’ve got to pay more because healthcare’s going up, and that’s just not good enough.

The community aren’t silly; they’ll see this bill for what it is. They’ll see this tax movement from this Government and what it’s for, and they’ll make a better decision into the future.

RYAN HAMILTON (National—Hamilton East): It’s really challenging, while we listen to the drivel from the other side that’s been there for six years. I’m so glad we’re bringing back reading, writing, and maths, because there’s one thing they don’t seem to understand: you don’t borrow to fund tax cuts; you let people keep more of their own money. I know they think it’s funny. It’s ironic. Actually, it’s about reducing your spending. It’s something you didn’t learn, and that’s why you’re now in Opposition.

And while the member Chlöe Swarbrick yelled at us for nine minutes in her debate, she didn’t properly read the regulatory impact statement from the Inland Revenue Department, which says it is estimated that the tax package, which includes a $25 increase to the in-work tax credit, will reduce child poverty by around 14,000, plus or minus 6,000—so that’s 20,000 to 12,000 children. We’re reducing child poverty. So maybe it’s time that you went back to school and did your own reading, writing, and maths. I commend this bill to the House.

Hon KIERAN McANULTY (Labour): Thank you very much, Mr Speaker. If this Budget was so good and if it really delivered what the Government is saying it is, don’t you think they’d want to speak for a bit longer than a minute and a half to talk about it? But they don’t, because right throughout this debate—the first reading, the second reading, and the committee of the whole House stage—all their claims have been unravelled.

You know, the rules of Parliament are quite restrictive, and there are certain words that you cannot use. You can, however, use a combination of words to describe things. There is a word for when people say one thing and do another, there’s also a word for saying something that isn’t true, and there’s also a word for saying something and then ignoring that and then not doing that thing, and all of those situations have occurred in this Budget. What summed it up quite nicely was that very brief contribution there, from Ryan Hamilton, that said that you can’t borrow to give tax cuts. Well, you can, because that’s what they’ve done. What they have done is they have committed to tax cuts which, in turn, have reduced the Government’s revenue, and then borrowed to fill the gap. They have borrowed for tax cuts, despite the fact that in their Budget at a Glance, it says, “Tax relief is fully funded”. But it’s not.

If there was the equivalent of the Advertising Standards Authority here, this should be reported because it is not telling it as it actually is, and there is no greater example of how this Government has let New Zealanders down than in housing. This Government has decided that instead of helping first-home buyers over that line to produce a deposit to buy their first home, it is a better and more pressing priority to do a $2.9 billion tax cut for landlords. In addition to that, this Government has said that it is a bigger priority for them to reduce the brightline test, which will ultimately see houses bought and flicked on much quicker than they would have done otherwise. A really interesting piece of information that came from the Government’s own analysis said that a combination of those two policies—the $2.9 billion tax cut for landlords and reducing the brightline test—will mean that rents will go up quicker and longer, and this is the Government that promised to bring down rents.

Now, what was I talking about earlier, about saying something that isn’t actually the case and knowing that that’s the case? For months, throughout the election campaign and at question time after question time after question time, the Prime Minister sat in that seat there and said to the House and said to the people of New Zealand that the tax cut for landlords would drive rents down. He knows that’s not the case, and now the Government’s own analysis says so. How can Government members stand up for 90 seconds or, in some cases, for quicker than a minute and say that this is a good deal for New Zealanders when they know that it’s not? The piddly, small amount that many, many, many New Zealanders are getting out of these tax cuts will not compensate for the additional costs that they are bearing. It will not compensate for the increase in rents and it will not compensate for the increase in insurance, nor will it compensate for the increase in rates, and every time that ratepayers open their bills and see a rates increase that they did not expect, they can lay the blame squarely on the Government.

Even the Government’s own advice says that, by repealing the water reforms, that has imposed an undue burden on councils, who simply cannot do it by themselves. Their own advice said that repealing the water reforms would cause a significant increase in rates, and later on in urgency, we’ll be debating a bill that does absolutely nothing to reduce rates. It fiddles around with processes to make things that can already happen happen quicker, but it does not in any way deliver lower rates for ratepayers, and that is the thing that is stinging Kiwis the most. It is a massive driver of inflation at the moment. It’s not just ratepayers; it’s renters as well, because, of course, if the costs on landlords and ratepayers go up, so too do rents. This is a fact. It is in their own advice, and it is disingenuous, to say the least, to stand up and crow about how much this Budget is delivering for New Zealanders when many New Zealanders are facing costs that will be far higher than the tax cuts that they receive.

In addition to the increased cost of rents and rates, the housing issue continues. This Government—and this is something that hasn’t been spoken about, and I’d be really interested on their thoughts. Perhaps if they’d contributed to the full time allocated, we might have been able to hear about this. A billion dollars: remember that—it’s a lot of money. A billion dollars they have removed from the maintenance budget of Kāinga Ora—$1 billion—because they want to do what they did last time, and that’s run down Kāinga Ora and then say, “See? The Government shouldn’t be involved in the provision of State housing. We may as well flick ‘em off.” It’s what happened last time and it’s what’s happening this time, and the fact is that in the Budget, in order, in part, to pay for tax cuts, they have taken $1 billion out of the maintenance budget for Kāinga Ora.

The question I have for the members is this: is a leaky roof still considered a roof over the family that is vulnerable and that needs housing? Because, obviously, that is exactly where it is going, and it demonstrates, yet again, that this Government doesn’t care about those that need it. They’ve made the wrong choices and they’ve got the wrong priorities.

When it comes to saying that they would do one thing and then not do something, there is no greater example than their promising vulnerable families who are facing an untimely and early departure of their family members who are suffering from cancer that they, if in Government, would fund prescribed cancer medication. They broke that promise—they broke that promise. They misled New Zealanders. They said they were going to do something that they simply could not do, and then they have the gall to turn around and try and blame us. I couldn’t believe it. The finance Minister was trying today, when she’s come under the pump—it’s quite clear that the message has hit home with the Government that this is a step too far for New Zealanders. To promise people that they would fund cancer medications when they knew they could never do it and they had no intention of doing it—and there are people that voted for that Government solely on that policy—and then to turn around and try and blame us. It was a cynical move, and if there was any credibility left in the finance Minister, it disappeared today, when she made that claim. It is disgraceful.

They should own it. They misled New Zealanders. They promised something that they knew they couldn’t deliver, they had no intention of delivering it—because they can’t; it’s not how Pharmac works—and here they are, turning around, and saying, “Oops, sorry. But, by the way, let’s blame Labour.” Nah—sorry, that’s not going to wash. If you’re going to campaign on something so personal as funding cancer medications for people who are desperate to get as much assistance as they possibly can and who then vote for you on that basis, own it. That was a choice that this Government made. They turned their backs on those people and they should own it, and instead of standing up for 60 seconds or 90 seconds and saying how great this Government is, how about those members using the time to tell those people why they made that choice. That would be the honourable thing to do—stand up and defend the decisions that they’ve made. Defend the decision to back landlords and those that are wealthy instead of following on the promises that they made on funding cancer medications.

And the best that they can come up with—the best they can come up with—is to tell me, “You’re running out of time.” That’s it, and I think that speaks volumes. They’ve been confronted with the truth and they don’t like it. Well, it’s not just us that’s going to confront them with it; they’re going home on Monday afternoon, when this urgency finishes, and they have to face their constituents. I’d rather be us.

NANCY LU (National): A majority of average-income Kiwi households will be better off from 31 July, following the passing of this bill in Parliament later today. This bill gives effect to the coalition Government’s promise to New Zealanders who are suffering with the cost of living crisis. Let me set the record straight: this bill is fully funded so won’t add to inflation pressures. This is what a fiscally responsible Government should do and will do. I’m honoured to be the last member to contribute to this bill. So I’m very proud to commend this bill to the House.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Bill read a third time.

Bills

Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill

First Reading

Hon SIMEON BROWN (Minister of Local Government) on behalf of the Minister of Justice: I present a legislative statement on the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill.

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

Hon SIMEON BROWN: I move, That the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill be now read a first time.

This bill is part of a package of proposals that support the Government’s Budget goal to deliver efficient, effective, and fiscally sustainable public services. The package promotes the effective provision of court and tribunal services and will contribute to the target of getting the Government’s books back into balance. Furthermore, this bill will increase revenue at a time when we’re investing a crucial $2.9 billion into restoring law and order and cleaning up the mess left by the last Government. Our Government is facing up to the reality left behind: New Zealand isn’t as safe as it once was. It isn’t the New Zealand many of us grew up in. This kind of revenue will allow us to invest in addressing serious youth offending, ensuring there are real consequences for crime, increasing prison capacity, and getting more police officers on the beat.

This bill will amend section 73 of the Public Finance Act 1989. I acknowledge the Minister of Finance’s agreement to the amendment. The bill will increase the proportion of fines retained by the Crown which are collected in the courts by the Ministry of Justice on behalf of local authorities and other organisations. The percentage of fines collected which will be retained by the Crown will increase from 10 percent to 14 percent and is expected to increase net revenue by $2.697 million across 2024-25 to 2028-29. This does not include fines collected for Government departments or Crown entities but does include council-controlled organisations.

Provision of collection enforcement services by the ministry for local authorities and other organisations includes a high volume of fines imposed for infringement offences. Individuals who commit an infringement offence such as illegal parking must pay a fine. If a person fails to pay an infringement fee, local authorities can choose whether to use the collection and enforcement services provided by the courts to collect this fee. When fines are recovered by the Ministry of Justice on behalf—

Hon Dr Duncan Webb: It’s a parking tax.

Hon SIMEON BROWN: —listen—of local authorities and other organisations—

Hon Dr Megan Woods: We’re listening all right—so’s the rest of the country.

Hon SIMEON BROWN: Listen up. When fines are recovered by the Ministry of Justice on behalf of local authorities and other organisations, 10 percent is credited to the Crown in accordance with section 73 of the Public Finance Act, and the remainder of the fine is paid by the local authority. The 10 percent deducted from fines is retained by the Crown, rather than the ministry, but reflects a contribution towards the cost of collection and enforcement services. The 10 percent retained by the Crown from fines it recovers was set in 1989 and has not been reviewed or increased in over 30 years.

The costs of collection have, of course, increased over that time. Local authorities and other organisations who receive most of the money the court collects for their fines benefit from using the service and should be responsible for a reasonable level of costs for the recovery. The increase in the amount of the fine the Crown retains from 10 percent to 14 percent is comparable to the proportion charged by private debt collectors. The recovery rate will remain competitive whilst still helping to cover the costs of collection.

This bill is part of a suite of changes to update fees and costs in courts and tribunals which will increase revenue. These fees and costs will be increased in line with inflation since they were last set, and most come into force on 1 July. There are 26 Orders in Council giving effect to the fee changes. Most of these have not been updated in over 10 years. These collection charges include fees paid to file unpaid infringements for collection and the court costs—these have not been updated since 1998—and the enforcement fee for fines, which was last updated in 2013.

It is appropriate that the costs of collecting and enforcing fines are recovered from those who commit the offences and have unpaid fines. The suite of changes, which includes this bill, will encourage recipients to resolve their infringements directly with the issuing authorities, rather than leaving them unpaid. It is important that where the courts’ collection services are used, the portion of fines retained by the Crown is also increased through this bill to ensure it reflects increases in collection costs. It is intended that this bill will come into force through the Budget night legislation, and the proposed commencement is 1 July 2024. I commend the bill to the House.

ASSISTANT SPEAKER (Teanau Tuiono): The question is that the motion be agreed to.

Hon Dr DUNCAN WEBB (Labour—Christchurch Central): No wonder there was kind of a smattering of half-hearted applause from the members on the other side there. That was one of the—

James Meager: We’re waiting for the rest of the speeches.

Hon Dr Megan Woods: That’s why you’re losing your long weekend.

Hon Dr DUNCAN WEBB: We’re very happy to be here and to debate the important issues of the day that this Government want to raise under urgency. One of those, my friends, is that we think we should make the local bodies pay a bit more to the Government for parking fines. We’ve got a parking fine tax. I don’t know where that member got his numbers from saying that this was going to raise millions of dollars, because the disclosure statement that I’ve got off the Table says that this piece of legislation next year will raise $466,000. So here we are debating fiercely a 4 percent increase in—and this is what this Government does: it’s so scrambling around to find money for its tax package that it’s had to go right to the back of the cupboard and find a 4 percent increase. Of course, the irony is that this is a 10 percent levy on collections that’s done through the court system. Of course, you don’t need to increase it and adjust it for inflation because it’s a proportionate levy. It makes perfect sense.

That’s the other thing. I mean, David Seymour must be seething because he’s got his new Ministry for Regulation thing going on and one of his big bugbears is that levies and charges need to actually relate to the costs. What work has this Government done? None. This is just a grab—this is just a grab—and this utterly cuts across the work that David Seymour wants to do. This is just a tax—and it’s not just local bodies, actually; it’s any number of entities, if you read the legislation itself. It’s any local authority or other organisation, department, an Office of Parliament, a Crown entity, a Schedule 4 organisation or a Schedule 4A company. Whenever they go to court to collect a fine, then this levy will be applied. So it’s just a little money grab; effectively, a tax on these other entities.

The other thing—if the Minister had done his homework, he’d know—is there’s a whole lot of exceptions littered throughout legislation as well. So fines under the Dog Control Act are exempt, for example. The Accident Compensation Corporation is also exempt. Fines under the Resource Management Act are also exempt. So it’s a strange little piecemeal thing. But, look, this is the choice they’ve made; this is how they’re going to do it. They’ve chosen to borrow money to increase debt. They’ve chosen this trivial tax package which is giving derisory amounts to our lowest-paid workers and they’ve got to find the money somewhere, so they’re going to dip into the back of the cupboard and impose an extra levy on local bodies.

Of course, we’ve got our spokesperson for local government, the Hon Kieran McAnulty, here and I’m sure he may have something to say because this is how they treat local bodies. They don’t help them out. In fact, here they are; they’ve got increasing rates—increasing rates—and what do they do? They just take a bit more money off them. They’re hanging out our local bodies to dry. Actually, the funny thing is that if there is any money to be made, it’s not by this bit of legislation; it’s by the numerous Orders in Council that the Minister alluded to in his speech. Because what they’re going to do there is they’re going to actually increase significantly the costs that are imposed on people who go to court to argue about their parking fine.

And let’s just—and this is in the disclosure statement—remember who this will impact most. It will impact our poorest New Zealanders. In fact, the disclosure statement itself says this will likely impact Māori and Pasifika disproportionately as well. So there we go again. Either—[Interruption] It’s what it says. You can naysay, but if you’ve done your homework and done your reading, you can see that that’s what it says. At least there is a disclosure statement in this case.

This is another ridiculous, trivial bill raising a few hundreds of thousands of dollars, and we’re doing it under urgency—utterly, utterly unnecessarily, but you’ve brought it here. We’re going to do our job. We’ll have a good look over it, and we’ve got a lot more to say about it. But so far, from what I can see, a silly little bill that the Minister’s brought to the House.

RICARDO MENÉNDEZ MARCH (Green): The Government is so desperate to find cuts to fund their tax cuts that ultimately benefit those who already have the means to do well, while throwing breadcrumbs to everyone else. They’re basically willing to reduce the amount that local government is able to have when it comes to the collection of fines, which actually, supposedly, are used to deter poor behaviour. But let’s make it clear: fines, in the first place, were already a free pass for the wealthy to get away with bad behaviour, because if you’re rich, a fine means nothing but a wet bus ticket on the wrist. A fine, if you’re on a low income or if you’re on the benefit—the same people who benefit the least from the Government tax cuts—could mean the difference between being able to pay your rent.

So let’s also illuminate where the Government is coming from: relying on punishments that actually, ultimately, only tend to affect the lives of those struggling the most and allow those who have six-figure salaries or more to get away with poor behaviour, and, at the same time, making it harder for local government to have the revenue to do what it needs to do to provide services to our local communities just to pay for those tax cuts. This is an unserious Government—fiscally irresponsible—that will, at any cost, for the optics of having tax cuts, completely undermine our public services, will undermine local government, and will continue with the rhetoric of using fines, which again are punishments for the poor and a free pass for the rich.

The Green Party thinks that the answer lies in the devolution and the resourcing of services to local entities. And for a Government that talks about localism, this is a bill that does the exact opposite. It’s really interesting just how fiscally illiterate the members on the opposite side are. You know, when Duncan Webb was talking about the amount of revenue that is going to be collected by this bill, the members opposite me said, “Oh, there’s a lot of money for a person.” No single individual is going to keep that revenue to themselves. That’s revenue the Government will be using, so I would encourage the members opposite to me that if they’re going to be interjecting, at least they should not be—or, actually, I invite them to demonstrate their interjections how fiscally irresponsible and illiterate they are and how much they’re committed to actually punishing those doing it the toughest while at the same time cozying up to the wealthy elite, the property investors, the 70 homes - owning landlords who will then be complaining about a potential capital gains tax from the left.

This bill is a nonsense bill. If we want adequate services for our communities—our communities having the right to have good waste disposal services, for example—the answer lies in resourcing our local entities, not depriving them of funds and the Government collecting that to offer these tax cuts. The truth is that this bill comes in the context of the Government making the cost of living more expensive for our communities. This bill is part of a range of interventions that relied on making life more expensive for people. And so the Green Party just simply won’t be supporting this bill. This bill also goes against our principles of appropriate decision making, because at no point, have we seen adequate consultation with local government authorities to ensure that this bill is adequately consulted on with those local government authorities who ultimately will be affected.

The bill relies, like I said at the beginning of my contribution, on punishments that allow the rich to get away with poor behaviour. If we look at the regulatory impact statement, it’s laid bare here that low-income individuals are likely to be disproportionately impacted by increasing costs. And I’ll quote: “These individuals are more likely to be unable to pay on time in the first place and may be more likely to default on their fines and have enforcement action taken against them.” The fines that we’re talking about end up criminalising poor people. For a Government that is so supposedly serious on reducing crime, they’re actually relying on means that end up criminalising people in poverty—a completely unserious Government. But I don’t even want to appeal to their values as if they care, because they don’t care. They don’t care about people in poverty, they don’t care about disabled people who are doing it the hardest, they don’t care about the poor people they’re criminalising, and they don’t care about their so-called localism they promote, because this bill shows otherwise. It’s a completely unserious Government, and the Green Party won’t be supporting this bill.

CAMERON LUXTON (ACT): Thank you, Mr Speaker. Nobody likes fines—getting them, paying them—but, unfortunately, sometimes this happens. Nobody likes to pay a fee in court, but often people end up there. And when that is done and there is a cost associated with that, it should be paid. Now, for too long, 10 years in some cases, and 20 in the case of court fines, the price has not gone up. This is a very fair increase, and I commend it to the House.

TANYA UNKOVICH (NZ First): I rise on behalf of New Zealand First to support the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill. This bill amends the Public Finance Act 1989 to increase, from 10 percent to 14 percent, the percentage the Crown retains from amounts of fines recovered for offences prosecuted by or on behalf of local authorities or other organisations. This will better reflect the cost of the collection and enforcement of court fines and ensure that it remains fiscally sustainable. This seems to be like a very common-sense approach, and since our party is a party of common sense, I commend this to the House.

Hon PHIL TWYFORD (Labour—Te Atatū): This rather modest, or some might say pathetic, little bill that’s take that’s taking up the time of this House, chewing through taxpayers’ money—as my colleague Duncan Webb pointed out, is likely to generate $466,000 for the Crown finances in the next financial year. It’ll probably cost more money going through this House in urgency than it will generate in the next financial year. It’s unnecessary.

But I’ll say this: this bill actually tells an important part of the story of this Budget. You see, this Government is desperately trying to claw back every little bit of revenue that it can get its hands on to shore up its crumbling finances. This bill increases the percentage of fines retained by the Crown when the courts gather fines on behalf of councils. The important bit of the picture for the public to understand is that this Government handed over $2.9 billion in tax breaks to landlords, part of a package of $14.7 billion that this Budget gives in tax cuts that will disproportionately benefit the well-off.

Now, net debt, as a result of this, will rise over the next four years by $68.3 billion to more than $220 billion. That’s $12 billion more than the Treasury forecast last December. Now, a member on that side of the House stood up not very long ago and said that the tax cuts are fully funded—the tax cuts are fully funded. Well, the only way you can say that the tax cuts are fully funded is that they are fully funded by borrowing—they are fully funded by borrowing. The Government is giving $14.7 billion in tax cuts; they are borrowing an extra $12 billion. They are fully funded by borrowing—that’s what they are.

So how is the Government trying to make their dodgy numbers add up? Well, they are shovelling costs onto Kiwis like there is no tomorrow. They’re bringing back the $5 prescription medicines fee. They have slashed the public transport subsidies that provided free public transport for our kids and half price for young people. There are extra road-user charges for electric vehicle users, and a 50 percent increase in car rego. They have cancelled First Home Grants. They are scaling back the building of State housing. They have reduced the quality of school lunches, and they have increased tuition fees for students in their first year. And now, there’s no depth too low for this Government to stoop than actually spending the valuable time of this House in urgency, clawing back hundreds of thousands of dollars in parking fines.

The fact that they didn’t campaign on this in the election campaign is misleading. It is dishonest. There was no word of this during the election campaign, but it is part of an organised campaign of clawing back revenue from New Zealanders by imposing a raft of new charges. But there’s more. All of these extra costs imposed on Kiwis are having an inflationary effect. According to Reserve Bank data, fees and charges increased; the inflation for the last quarter was 2 percent—it has doubled since the Labour Government was in office. That is, without doubt, contributing to inflationary pressures that will keep interest rates higher than they otherwise would have been. And that, more than anything—more than the raft of extra charges this Government has imposed on New Zealanders—will hurt hard-pressed families by increasing their mortgage servicing fees. This is a Government that is making bad choices, it is breaking promises like there’s no tomorrow, and New Zealanders won’t forget it.

JAMES MEAGER (National—Rangitata): Well, ladies and gentlemen, now we know why the Labour Party thinks that the tax relief offered by the Government is trivial and miserly and not quite enough, because the Labour Party wants to email every hard-working New Zealander and take their tax cut and donate it back to the Labour Party. That’s what they want to do. That’s what they think is an appropriate use of taxpayer dollars—back to the taxpayer, straight back in Labour Party coffers. Shame on them.

This is my first contribution today, which is also 30 May still in Parliament land, and as it is 30 May, I’d like to wish Mike Butterick a very happy birthday for yesterday, for today, for tomorrow, for Monday, for Tuesday—for as long as it takes for this hard-working Government to get through the programme to support the Budget that gives tax relief for hard-working New Zealanders and not the semi-retired Labour Party.

This bill—and I’ll remind the House—is a very concise, very short, very simple, sharp bill; lots of quick, sharp calls because it does one thing: it creates a small increase to the amount collected by the Crown from local authorities, from 10 percent to 14 percent, for cost recovery, basically driven under the rampant inflation from the previous Government. It does one short, simple thing. It is excellent, it is concise, and I look forward to its passage through the House, swiftly or otherwise.

Hon KIERAN McANULTY (Labour): Thank you very much, Mr Speaker. I think that speech there was quite telling. I’m very pleased that James Meager realises that we will still be here on Monday and Tuesday, because they thought that we would give up. They gave up. They were giving 60-second, 90-second speeches, and here we saw another one, but it spoke volumes because he didn’t actually speak about this bill; he gave a speech to the previous bill. He had a point to make. He didn’t have anything to say about this bill, because this bill is a pointless exercise that will actually contribute to them still being here on Monday.

Why on earth are we ramming this through under urgency? This bill is utterly pointless in the context of the Budget and utterly pointless in the context of this urgency, and it actually is a relatively small amount of money in the context of the Budget. It does speak volumes as to why they believe that this bill is so important, because they are so desperate for any form of revenue to try and plug the gap. But the problem is the gap is too big. The gap is so big that they’ve had to borrow billions in order to fill it.

But there’s a principle behind this bill that I oppose, and it is, yet again, the National Party kicking local government. Yet again, the National Party thinks local government are so irrelevant that we can actually take some of what they would consider income and revenue and try and plug the gap that they created by their decisions, because, ultimately, it is their decisions, isn’t it? They are the ones that are deciding to give $2.9 billion to landlords, they are ones who are deciding to reduce the time of the brightline test—they are the ones that are deciding to do that instead of doing things like funding cancer treatment that they promised.

But here’s the thing: in the context of this bill and local government, they promised that they would help every council in the country pay for their water. Matt Doocey stood in this House, in that seat right there—I remember it like it was yesterday—and he promised councils that if National were elected, they would help them pay for their water. We knew at the time it wasn’t true, because we knew that we were talking about $185 billion. They broke that promise, and you can add it to the list, because there is a long winding list of broken promises that result from the Budget, and that is one of them.

Now, after doing that, and after repealing water reform and placing the burden back on councils—and we’re about to debate a bill that actually won’t help councils one bit, and won’t reduce rates bills by any meaningful standard—here they are having another crack at local councils. It’s not bad enough that they have to pick a Minister who’s totally disinterested in the sector; now they have to put the boot in by saying, “Yep, we’ll take $400,000 this year and $500,000 the next year.” Oh yeah, OK, it’s only 4 percent, but here’s some context: Local Government New Zealand came to the Governance and Administration Committee earlier this week, and they talked about the pressure that they are under in terms of the rating system. I asked them whether the Minister had anything meaningful to discuss with them about assisting them with rates, and they said no.

They were excited about the prospect that there might be some shared GST for new builds. Well, that’s not in the Budget, so there’s another thing that they’ve dangled in front of local government and they’ve taken away. What they told us, which is useful in terms of understanding how important this actually is to local government—they used the example of the Mackenzie District Council, who, because of the increase in tourists that have been visiting their district, have had to fund someone to clean the toilets twice a day as opposed to once a day. Now, that small adjustment equates to a 1 percent increase in rates across the entire district. That’s massive. So, yeah, OK, fine, it’s only $400,000, but that’s actually significant for local government, and it’s very significant, proportionally, to small rural councils—the very areas that these people are supposed to represent.

Hon Matt Doocey: Cheer up—it’s not that bad.

Hon KIERAN McANULTY: And all I get is “Cheer up”.

Hon Matt Doocey: You’re negative all the time—“Negative Nancy” over there.

Hon KIERAN McANULTY: We’re negative, because you guys have stuffed local government. It’s easy for Matt Doocey to say, sitting there in Waimakariri, who were the lead opponents to water reform, who have all their pipes paid for by the Government after the earthquake, and then say, “No, we don’t need reform.” Matt Doocey has let his district down. Matt Doocey has let New Zealand down, and he claps and he laughs and it’s a genuine display of—

Hon Matt Doocey: Hey, I won my electorate, buddy. How did you go?

Hon KIERAN McANULTY: Now he’s making fun of people who didn’t win their electorates; I’ll pass that on to Nicola Willis, shall I? They snap and they respond and they have a crack, because they have no answers. It’s typical of this arrogant Government.

CAMERON BREWER (National—Upper Harbour): I rise to support this bill, that makes a small amendment to the Public Finance Act, but, once again, the Opposition are using every call obsessing about tax relief. They’re obsessing about tax relief, claiming it’s both unpopular and insignificant. Well, three numbers—three numbers: polls show that 75 percent of Kiwis want tax relief, 75 percent; that’s the first one. Second number: 83 percent of New Zealanders and 93 percent of households would benefit, according to Treasury, from tax relief. They’ll benefit from tax relief on 31 July. This is a suite of packages to make New Zealanders’ lives a lot better. They’re looking forward to it, they want it, they support it; we support them. I commend the bill.

Dr TRACEY McLELLAN (Labour): Thank you, Mr Speaker. Thank you for the opportunity to say a few words on the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill. Saying it took longer than what it actually does. It’s a trivial little bill that is a waste of our time.

But before I start, may I extend my birthday wishes to Mike Butterick. It’s an interesting fact that because we’re in urgency, the day doesn’t actually end, does it? So some people have birthdays, some people have birth weeks or birth months, but I reckon Mike’s birthday is going to take about 5½ days, maybe six, so I think we’ve got plenty of time—to congratulate him on his birthday best of week. Also, while I’m at it, Mr Brewer—if I was him, I’m not entirely sure I’d be mentioning polls at the moment. I don’t think that that’s necessarily a good way to make a contribution, but nevertheless, I digress.

This bill raises two things for me and only two things. I think, as has been said, it’s the second bill up in urgency. It’s like a jewel in the crown, isn’t it? You know, the No. 2 banner comes up and what have we got? The Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill, which is, essentially, just a parking ticket tax—that is all it is. I mean, we remember, don’t we? It’s not that long ago that both Nicola Willis and Christopher Luxon were talking a really big talk about what turned out to be a pretty disappointing tax policy. Then they talked up this really big talk, and actually they both staked their jobs on it and their reputations on what turned out to be pretty facile tax cuts. And here we are, the second bill up under urgency—which is going to take many, many days, and it could have been introduced on Monday morning rather than Friday—talking about parking ticket tax.

Now, as has been said, this bill was a bit shoddy and it doesn’t really have much of a rationale behind it. The cost recovery impact statement (CRIS), as has been pointed out, said that it took into account private sector fees. That’s all right—private sector fees. You might look at some sort of comparison of what the private sector’s doing, but it’s completely irrelevant. This is about cost recovery, and so even the CRIS couldn’t quite get to grips with what this bill is about. Then it talked about cost pressures, but it doesn’t actually provide any information or any evidence whatsoever that the current 10 percent charge is failing to recover those costs. But the thing that really gets me is that it’s really bad regulation. At a time when we’ve heard huge amounts of hubris, where we’ve got David Seymour spending up a storm setting up his Ministry for Regulation, his citadel of all things good regulation, we’ve got this shoddy little bill coming through, which is clearly just bad regulation.

As colleagues have previously said, this is all about choices. There was a choice to put this up second on the order. There was a choice to show and use this House’s time to do things that actually mattered, just like there was a choice and the ability to not make so many broken promises, as we’ve heard over the last couple of days. So, in all seriousness, let’s just think about that for a minute. For pensioners that are sitting at home thinking to themselves they were going to get some relief, which is such an oxymoron, they’re getting $4.50 a week, and that’s per couple. Then you’ve got minimum wage earners who are earning 50c more an hour. These are the choices that were made. This is the bill we’re debating instead of things that are more serious. If you want to debate things that are serious, why are we here talking about parking ticket taxes?

But the one that really kicks it for me is the fact that patients were led to believe, over a period of time, that 13 new cancer treatments were going to be available to them. These are real people with real lives, with real diseases, with real hopes, who were led to believe that this was going to happen, and yesterday, during this Budget process, that was ripped out from underneath them, and that is deplorable. But never mind, here we are again talking about parking ticket taxes, something that is completely irrelevant. It is a waste of our time. We’re going to be here for hours looking over something that is the Government’s choice, and I think it’s a complete waste of time. We do not commend it to the House. I look forward to hearing many, many more contributions from that side of the House about how they can justify not just this but all of their actions over the last couple of days.

PAULO GARCIA (National—New Lynn): Mr Speaker, thank you. The Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill increases the retention by the Government by 4 percent. A small amount, the members across say, but every small amount helps the Government coffers that have been left in dire straits and in shambles, and every little bit helps. This bill will not only help get the Government Budget in balance but it will also engender accountability and responsibility for people to pay their infringements and fines and penalties. I commend this bill to the House.

A party vote was called for on the question, That the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill be now read a first time.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Bill read a first time.

ASSISTANT SPEAKER (Teanau Tuiono): This bill is set down for second reading immediately.

Second Reading

Hon SIMEON BROWN (Minister of Local Government) on behalf of the Minister of Justice: I move, That the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill be now read a second time.

I would like to thank members for their contributions on this bill in the first reading debate. To recap my earlier speech, the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill makes a minor amendment to the Public Finance Act 1989. This will increase the percentage of local authority and other organisation fines collected by the Ministry of Justice that can be retained by the Crown from 10 percent to 14 percent, with effect from 1 July 2024.

This bill is an addition to a suite of Orders in Council that will adjust fees in courts and tribunals and fees and costs for collection services to account for inflation since fees were last updated. The increase in the amount retained by the Crown from fines recovered for local authorities and other organisations is comparable to the rates for private debt collection but remains competitive. It is important that local authorities, who receive most of the money collected, should pay a reasonable amount towards the cost of the recovery of these fines.

The change from 10 percent to 14 percent will come into force on 1 July 2024, which will realise revenue immediately and contribute to the Government’s Budget goal of delivering a more efficient, effective, and responsive public service.

I note members on the other side of the House have been spending their entire debate trying to drag out speeches on a bill which makes a minor but important change to ensure that the functioning of Government can actually be delivered efficiently and that the costs are appropriately recovered—principles of good Government which were ignored for the last six years. I commend the bill to the House.

ASSISTANT SPEAKER (Teanau Tuiono): The question is that the motion be agreed to.

Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Mr Speaker. Well, such passion over parking fines; it’s so good to see. Look, the fact of the matter is, the irony of this is, that the premise that the Minister of Local Government brings this to the House with, that there’s been cost inflation in collection, makes no sense on a number of grounds. The most obvious one is that if you’re charging a percentage of something, then there is no cost inflation. As the fines go up, the amounts recovered go up. The documents make it absolutely clear that there’s no research been done on this. The Government doesn’t even know how much it costs to collect these fines. The documents are there on the Table in the cost recovery impact statement.

The bill adds another 4 percent levy, so 14 percent, when a local body goes to court to get a parking fine or a noise breach fine or something like that. They’re now going to not get all of the money. They were previously getting 90; they’re now going to get 86. It’s interesting that the Government’s now competing with debt collectors, because in the documentation, they say this is comparable with what a debt collector would charge if they were to collect this debt, as if they’re in the market for debt collection services, which is a very strange way to approach what size you impose on some charge or levy. In fact, it’s not just strange; it’s outright wrong. The idea that there’s a market for it and, therefore, you should pitch it at that market when you’re the Government just makes no sense.

Now, when the Government delivers a service, the Legislation Design and Advisory Committee principles, which are really quite useful, are very clear on this matter. The task of the Government when imposing costs of this nature is to determine what the cost delivery is. Now, there’s latitude for when there’s overs and unders in multi-year ebbs and flows, but, at the end of the day, you should never be charging someone an amount which has an extra bit of added fat. But that’s exactly what we’ve heard from Simeon Brown. This is all part of, you know, running a not-too-massive deficit, right? He’s going to impose this extra 4 percent and he’s going to reduce his Government’s deficit by around $200,000. Now, when we get to the committee—of course, we could’ve had a much closer look at this if we’d gone to a select committee, but the time for that kind of examination will come next, and I’m actually going to be asking him some questions, so he might want to get the work done in advance about how he thinks he is going to make this money, because I, frankly, can’t see it. But at the end of the day, this is just hurting ordinary New Zealanders.

The devil, of course, is actually in the regulations which are paired with this piece of legislation where, you know, it talks about increasing the court cost and filing fee from $30 to $55. Now, that’s actually going to raise more money than the levy itself. Also adding to, essentially, the enforcement fee—currently $102; going to $133. Now, as is common with this Government, all of the documentation says, “We haven’t actually had enough time to work out where the money’s coming from or exactly how much it will bring in, but this is our best guess.” It’s really just not good enough. It’s, essentially, another little tax, because if it’s not shown to be cost recovery, it’s a tax. So here we go, a nice little tax snuck in through urgency. Well, you know, local bodies aren’t going to love you for this.

Ultimately, particularly around those court costs, people are going to go and say, “You know, I didn’t park there. It wasn’t a double yellow line.” They’ve got their right to go to court and have their say, and now when they lose, they’re going to be paying more for their right to go to court and ask the question. So that’s actually an access to justice question. What we’re doing is we’re saying, you know, “If you want to have an argument about whether or not you should pay this $60 fine or this $40 fine, then if you lose, it’s going to cost you a hell of a lot more.” The actual likelihood of people asking the question—legitimate questions—is going to fall, and so that’s really, really unfortunate.

So the cost recovery impact statement is on the Table, and I would implore members to read it, because it’s actually a useful document, and I actually do commend the Government for making sure it was generated before they came to the House, but what is abundantly clear is it’s littered with references to the fact that they haven’t had the time to actually work through whether this is appropriate, whether it is actually cost recovery or—

Arena Williams: Hot reckons.

Hon Dr DUNCAN WEBB: —a hot reckon; thank you, Arena Williams. I believe it is a hot reckon. Actually, it’s just a guess. It’s just a finger in the air, or it’s more of a “What do you reckon we could get away with?” That’s really what it is.

It’s rushed, and the other thing is, look, it’s absolutely unnecessary for it to be here today. The lion’s share of the increases in revenue are actually outside of the control of Parliament, other than the Regulations Review Committee, because the biggest gains are being made by the increases in the court costs and so on, which is done by Order in Council. But, no, for some reason, and I am perplexed—and I will ask the Minister, when he is obliged to answer, or sort of obliged, why he’s come here when he really didn’t need to. It’s the most trivial of all of the things he could’ve done. So it’s nickel-and-dime stuff, and there’s not really been the work done.

In fact, I’ll quote from the information statement, which says there’s limited financial information which provides a reasonable basis for decision making. So it’s just classic bad regulatory practice. It’s making law in the dark and it’s unnecessary and it’s rushed, and, not only that but it’s such a small matter that it would’ve been no problem at all to have it done on another occasion in the normal way. So why it’s been crammed into this urgency, I really don’t know.

Of course, the fact of the matter is, even at the 10 percent levy, we already have, as the impact statement says, some councils choosing to use debt collectors because it’s more effective. So the irony is that by increasing this amount, there’s a—well, the economists amongst us would say, as night follows day, more councils will use debt collectors because the Crown has become less competitive. That’s actually not a good thing. I’m not sure we want to be creating an industry of debt collectors who are making money off collecting money for local bodies. You know, I think we should really avoid that.

Maybe that’s what this Government wants. Maybe they, you know, want to privatise parking fine recovery. That’s the kind of Government we’ve got. Basically, this is an unfair levy. It doesn’t bear a relationship to the actual costs; it can’t be shown, and that’s something that a Government which has come in with a hiss and a roar, saying, “We’re going to examine regulation. We’re going to make sure we do things by the book. We’re not going to run fast and loose. We’re not going to”—and, of course, this is exactly, right down the middle, what they rail against: random taxes which aren’t thought through. Here we have it: it’s not shown to be justifiable, it’s not shown to be cost recovery, it hasn’t gone through a good process, and yet, boom, there we have it—in urgency, rammed through.

Of course, the percentage amount—you know, the Public Finance Act has been there for a while, and it imposed this 10 percent amount on the basis that across all of the fines, it was roughly enough. Of course, as fines have gone up, so has the amount recovered. I am curious—and the Minister will no doubt ask—why he thinks that this will get $400,000-odd in 2025-26 but go to $600,000 in 2028-29. Unless he’s going to get the councils to issue more parking tickets, I just can’t see what his basis is—unless, of course, he’s intending to further increase that percentage amount. Of course, the comparison with private sector fees is entirely inappropriate. The idea that what the Government should charge for a levy is based on what the competition does in the private sector actually cuts fundamentally across what imposing a levy is. Imagine if that’s how Zespri levy, or some other thing. It would—

Ingrid Leary: Judicial review—judicial review it.

Hon Dr DUNCAN WEBB: Unfortunately, Parliament isn’t subject to judicial review, but maybe it should be. That’s a whole other constitutional conversation. But, silly little bill, poorly proofed, and I cannot commend it to the House.

CELIA WADE-BROWN (Green): I rise to speak against the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill. This is almost the only mention of local government in the whole Budget. Minister Brown has talked up a big storm about working with councils, devolving decisions, letting local communities have their say, but what do we have here? We have an ambush, not a partnership between central and local government.

The Ministry of Justice says: “Finally, the paper does not meet the consultation requirements because the proposals in the paper have not been the subject of any substantial consultation with relevant stakeholders.” There’s the “consultation” word again. The Local Government New Zealand chief executive tells me they were only made aware of this, this morning.

Hon Simeon Brown: It’s called Budget urgency.

CELIA WADE-BROWN: Is it? Or is it a trivial little ambush—an arrogant ambush for a relatively trivial amount of money? There’s no budget for city or regional deals. There’s no budget for GST back on rates for existing or new properties. There’s no allowance—zero allowance—for paying rates on Government buildings.

Hon Member: Talk about the bill, for goodness’ sake!

CELIA WADE-BROWN: We are in a discussion about urgency during the Budget.

Hon Member: No, no. We’ve had the urgency debate already. We’re talking about the specific bill.

ASSISTANT SPEAKER (Teanau Tuiono): Order! Order! I don’t want a commentary. Continue.

CELIA WADE-BROWN: There is a context in which this bill has been proposed and it is not an attractive one. Some people have trivialised the issues of where we have fines and enforcement, but let me give you some examples. Nobody likes paying fines, but they’re avoidable. If we can’t shift cars that are parked on the footpath, that’s an issue for anyone with a pram or a wheelchair. If we can’t shift cars out of bus lanes, that’s an issue of congestion, which I would have thought the Minister in his other hat might have been interested in.

Hon Member: How are those cycle lanes helping?

CELIA WADE-BROWN: And, yes, it would be a good idea to move the cars out of the cycle lanes—good thinking over there. I think this is cynical and unfair because we are recovering a trivial amount of money for central government, but you are not helping local government recover any of its costs.

There’s been a recent article—I don’t always agree with the third Brown that we’re talking about here. We have Minister Brown, we have MP Wade-Brown, and we also have Mayor Brown, so it can get confusing for people. So you might need to be pay attention as to which Brown we’re talking about.

Hon Matt Doocey: Who’s your favourite Brown?

CELIA WADE-BROWN: OK, we could have a little poll, but at the moment—and this is something that could have been changed. You could have changed this. Auckland Transport can only charge $53.60 for towing, towing off the footpath, towing out of the cycle lane, towing out of the bus lane, towing off the dangerous corner, and the average tow cost is $99.00. You are really not helping local government. You’re getting your measly little extra 4 percent, but you’re not helping local government. There are many other—

Hon Member: Who’s next on the list?

CELIA WADE-BROWN: —you can call me “Your Worship”, I don’t mind. I’m sure Mr Foster won’t mind either.

Hon Member: Where is he?

Hon Simeon Brown: He’s a better “Your Worship”.

CELIA WADE-BROWN: So you want to recover all of the central government costs—

ASSISTANT SPEAKER (Teanau Tuiono): Please don’t refer to the absence of members in the House—and continue to have a conversation with the Speaker.

CELIA WADE-BROWN: Through the Speaker—

ASSISTANT SPEAKER (Teanau Tuiono): Yes.

CELIA WADE-BROWN: —this Government wishes to recover its pathetic little recovery costs, but there’s no partnership. In fact, there’s—

Hon Member: It’s an ambush!

CELIA WADE-BROWN: It’s lovely to have the help from the Opposition or even the Government.

Arena Williams: They’re just being horrible. Keep going Celia—keep going.

CELIA WADE-BROWN: I shall, I shall. What are fines for? What are the courts for? They are when people want to go and argue the case—and we do need to recover the costs. There’s no disagreement about that. But why recover central government costs? Why focus on that? Why not support the councils? Whether they’re unitary, whether they’re regional, whether they’re city, whether they’re district, they all have issues that need enforcement. It might be dumping—it might be dumping rubbish into reserves. Oh, we don’t want to condone that. But where are you helping local government to recover all of its costs?

So we have councils, 76 of them, who already don’t quite agree with some of the things that this Government’s promoting. Why not form a bit of a partnership? Why not at least talk to them about how we can work together to bring the enforcement into a more even and effective system? It’s cynical, unfair, and I think it shows perhaps a lack of understanding of the needs of local government. Thank you.

ASSISTANT SPEAKER (Teanau Tuiono): Members, the time has come for me to leave the Chair and go for a kai. The House will resume at 7 p.m.

Sitting suspended from 6 p.m. to 7 p.m.

ASSISTANT SPEAKER (Maureen Pugh): Members, we are up to the second reading of the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill. We’re up to call No. 4, which is the ACT Party call. I call Parmjeet Parmar.

Dr PARMJEET PARMAR (ACT): Thank you, Madam Speaker. I am taking this call on behalf of ACT to support the second reading of the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill. This is a sensible bill, and it shows that this coalition Government—that is, National, ACT, and New Zealand First—really wants to see that our public services are financially sustainable. We know that this is about the amount that is retained by the Crown from the collection services that are delivered by court for local authorities and organisations. This is going to be increased from 10 percent to 14 percent. The last time this price was set, which was at 10 percent, was in 1989; so it’s been around 35 years. It’s been a long time, and what it does is bring it in line with what private debt collectors charge. It is a very sensible policy, and I think we should all support this bill. The ACT Party is supporting this bill. Thank you, Madam Speaker.

TANYA UNKOVICH (NZ First): Thank you, Madam Speaker. I rise on behalf of New Zealand First to support the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill. Now, it makes a minor but very important to the Public Finance Act 1989. It’s common sense, and as I said in the previous reading, anything that is common sense New Zealand First will support. I commend it to the House.

ARENA WILLIAMS (Labour—Manurewa): It’s a privilege to take this call and I’m very happy to do so. My call will be short, but I want to make some important points about this ridiculous bill that absolutely is not worth our time in urgency. This Minister has come down to the House and he has asked us to sit here on a Friday when we could otherwise be in our electorate serving our constituents and talking to them about their concerns when it is Budget week, whereas, instead, we are dealing with parking fine taxes.

Hon Simeon Brown: Don’t be so workshy.

ARENA WILLIAMS: This Minister is in charge of it too. He’s not the justice Minister but he is the Minister who cost his finance Minister about $1.5 million from the land transport plan. When did that happen? Was that at the Transport and Infrastructure Committee? Who was on that? Remind me how much that cost. Was it about—I don’t know—1.5 over the forecast period? Is this how much this bill saves? Good on that Minister for finding savings, but, unfortunately, those savings are coming straight out of the pockets of ratepayers, straight out of the pockets of mayors and councils that that Minister got on the stump at election time and said he would be fighting for. He told local councils around this country that he would be on their side, yet here he’s on their side reaching into their pockets to pull out another 4 percent of the costs that they are levying on ratepayers.

That’s the approach of this Government. It’s to make sure that the Government is getting more of people’s money so that they can announce it on Budget day as a tax cut. Well, good on that Minister! At least he made up for it when I spox’ed him at the select committee. So I am going to be raising some issues at this committee stage. [Interruption] It will be a lively committee stage debate, you can see, because there are a number of Government members who want to contribute just in my call.

What I’m going to get to is it’s sort of about the reasons why one would charge a levy or a fee. I want to start to unpack why this isn’t in fact a fee—it’s more like a penalty that’s being imposed on people—and why this isn’t the appropriate way to do it, in legislation. The cost recovery statement that we’ve been provided with does go into that and, as some of my colleagues have spoken about, this shouldn’t be thought of as pure cost recovery, because it’s not. Because we haven’t had any policy advice about whether that 10 percent that is levied now does in fact not meet the costs to actually recover the debt. If that’s the case, if it was in fact a bright idea from this Minister to make up for some of the costs, then that’s not actually cost recovery. It’s being levied on councils, who ultimately pass it on to ratepayers, who are exactly the same people who would otherwise benefit from other savings. So it’s just passing costs here to people out there to pay, and that’s not actually what the cost recovery mechanisms should be used for.

I’ll also be asking some questions around whether it’s reasonable that local government should pay more for the collection of these fines, given that they already have a mechanism to increase the actual dollar amount, which is through the Orders in Council. It is important that local councils are able to levy fines. You create some certain policy outcomes by only allowing very, very small fines, and you create certain policy outcomes by levying larger fines.

Celia Wade-Brown made an excellent contribution, which was continuously interrupted by that side of the House, about why, for instance, with parking fines, you create a certain policy outcome if they are artificially low. So there are reasons why you might want councils to be able to levy appropriately high fines in that situation, but then there isn’t necessarily a policy rationale for why—on those fines, when the cost of recovery will go up in dollar amounts, if that cost also rises because it is a proportional amount—you would then need to increase the proportion as well. I’m sure we’ll tease that out in the select committee stage—

Hon Rachel Brooking: I’m looking forward to that.

ARENA WILLIAMS: —and we are looking forward to that, as my colleague the Hon Rachel Brooking says. Parking fines are something which actually do change consumer behaviour. They are something which affect the way that our cities feel, so it is useful for us to really get into the detail of what the rationale is for charging those fines, which is very different from why you would charge court fees. Court fees raise all sorts of access to justice issues, and there are also different policy rationales for that. This bill uses a blunt instrument to treat them as if they’re both the same, and that is the wrong way to do this. So I cannot commend the bill.

RICARDO MENÉNDEZ MARCH (Green): Thank you, Madam Speaker. Before I begin my contribution, I just want to acknowledge my colleague Celia Wade-Brown, who was making some really important contributions—particularly around the work that central and local government are yet to do together. I think it really speaks to the other side of the House, because I was paying attention to the interjections. It really speaks to the approach around this from the other side of the House when they would rather mock style than substance, and when they themselves are making 12-second contributions because they cannot substantiate the bills that they’re putting forward, because they just want to go home.

For a party that talks about hard-working Kiwis and yet are not able to work hard to back up their shabby bills, I think they owe the public a bit of respect when it comes to, for example, this nonsense of a bill. All it will do is actually deprive local government—it will continue to widen the divide both in relationship but, actually, in resources of central and local government. It says a lot that this bill was introduced under urgency at a time—

Carl Bates: Efficiency.

RICARDO MENÉNDEZ MARCH: —when actually we should—it’s not efficiency. I want to pick up on that comment, because this Government thinks, as we have debated through urgency, that doing poor, non-robust work to produce legislation is efficiency. They think that putting bills that ultimately impact those who have the least resources the most amounts to efficiency.

The reality is that they’re so desperate to create savings that they’re scraping the bottom of the barrel, putting legislation in place that touches actually on a subset of criminal offences that, as has been well traversed, impact low-income communities the hardest. This is something that is reflected in the regulatory impact statement, and the members haven’t been able to give contributions as to the substance of this. So I think it’s really important that we contextualise this bill, as I said before, in the broader Budget, a Budget that is cake for those who have it well, and crumbs for everyone else.

I want to go back to the regulatory impact statement. They talked about not just low-income people but Māori, Pasifika, disabled people, and other communities who are most disproportionately impacted—and young people as well. In fact, the criminal offences that we’re going to touch on here—or the subset of those—affect young people the most. People with fine debts are also, as stated in the regulatory impact statement, more likely to be under 45. In fact, 73 percent of those are aged under 45. When we look at, for example, the previous bill that we were discussing, it’s easy to see why this is not just an attack on the poor but also an attack on young people.

Yes, fines can sometimes play a role in changing behaviour, but we have to remember that fines, at the end of the day—because they’re basically a flat amount and they’re not actually increased by your income—are basically a free pass for those who can afford to pay them. So when it comes to changing behaviour, we have to also remember that, ultimately, it’s not just the behaviour that changes; it could actually result in people being put in a position of hardship. Whereas if the members to my left commit anything that results in them having to have these fines, it amounts to nothing. They don’t have to make any tough choices to pay these fines. But, for somebody who’s on benefit—a disabled person who relies on income support—and receives those fines, actually, it can be the difference between putting food on the table or paying the rent.

I’m seeing frowns on the left side of the House, but the reality is this shows their disregard for the communities least benefiting from the tax cuts yet most affected by this unserious piece of legislation, this desperate, desperate attempt at producing savings from a Government that is ruling for the wealthy few but not the many. The Green Party will continue opposing this bill and calling out the absurd behaviour from a Government that is absolutely fiscally irresponsible. Rather than seriously investing in public services that reduce the cost of living, like free healthcare and free education, they’re actually cutting back subsidies, putting out this shamble of legislation and actually exacerbating the cost of living crisis.

JAMES MEAGER (National—Rangitata): We are witnessing the decline of the once-great workers’ party. Not content, in Government, with reaching into the pockets of New Zealanders and taking their tax, they now, in Opposition, want to reach into the pockets of working New Zealanders and take their tax relief. This is a very simple bill. It takes cost recovery from 10 percent to 14 percent to deal with the rampant inflation made under the previous Government. It’s a bill by a great Minister, shepherded by a great Minister. I commend the bill to the House.

Dr TRACEY McLELLAN (Labour): Thank you, Madam Speaker. Just before we—

Carl Bates: Read the title!

Dr TRACEY McLELLAN: No, I won’t do that. Just before we start, though, I thought that was an interesting comment made by James Meager across the aisle about it being somehow something to do with inflation, when we’ve just traversed this topic about it being proportional, which makes absolutely no sense—but that shouldn’t be surprising.

Thinking about this bill again—and, honestly, I almost had a wee yawn when I stood up, because I thought to myself, “How much attention can we pay to this silly little bill on a Friday night?” But, as it happens, I’m prepared to spend a good nine and a half minutes talking about it. The contributions from the other side, from the Government, have been quite revealing, I think, haven’t they? They haven’t really been able to justify. When they have made contributions, they’ve been a little bit erroneous. They keep just saying that it’s important. As my colleague Riccardo Menéndez March has just said, we do have to take this in the context of the Budget, and we should be able to do that, because that’s what this Government has done—but to put it at number two in their line-up of important things to go through during an urgency period! So we have to think of it in the context of the overall Budget.

When I think of the overall Budget, the first thing that comes to mind, again, is the fact that it’s all about broken promises. There were heaps and heaps and heaps of families yesterday who were expecting to get a $250 tax cut. That’s just simply not going to happen. For most people, for those families, it’s around $60 to $70 a fortnight. Then there’s the pensioners—a couple; two pensioners—$4.50 a week. But the thing that’s galling, the thing that’s really, really galling, is the $3 billion taken out of climate funding. When you think of all the damage that that does, the fact that we’re sitting here talking about parking ticket tax at this time of night feel like a little bit of a parallel universe, doesn’t it? So let’s—

Carl Bates: Well, sit down, then.

Dr TRACEY McLELLAN: No, I won’t sit down. Let’s have a deep dive into what this bill does. It kind of feels to me that the Government backbench MPs don’t know what this is about, so let’s just go through some details. The bill enables the Government to take an extra 4 percent on top of the existing 10 percent when it collects fines on behalf of local bodies. Now, it’s anticipated that other costs such as collection fees imposed on citizens will be increased by regulation. That’s nothing to sniff at; that’s something that I think we should think about a little more deeply.

Now, some may say that this is a money grab; it’s an effective tax on local bodies. I think so too. Taking money that would go to local authorities to meet the cost of tax cuts, and that’s what it is all about, isn’t it? As we’ve heard tonight, it’s like they went through line by line and decided what random thing could they squeeze a little bit of money out of, and by little—and I do mean little: it’s trivial; it’s a ridiculous amount of money in terms of the Government’s coffers, but it does mean a lot in terms of local government. [Interruption] And you’re right, Kieran McAnulty.

Hon Kieran McAnulty: I know.

Dr TRACEY McLELLAN: I know you know! Look, the increased costs will ultimately be borne by the people that pay these fines. As we’ve also heard tonight, we know that, disproportionately, it’s often the people who have the least that end up in situations, because vulnerability begets more vulnerability, where they incur fines. Once those increases are made, therefore they do that more tough. So in a Budget that’s already hit those very same people in the pocket, it’s hit those very same people in terms of their high expectations, the promises that they were sold, so to turn around and have the second thing that comes through this House tonight under urgency being an increase to fines feels a bit rich, doesn’t it?

Now, the cost recovery impact statement, which is an interesting document—it’s several pages long and we can probably have a look through that as well; it’s got some good tables and some figures. But, briefly, the cost recovery impact statement, which is like a regulatory impact statement—it’s like a RIS but it’s a CIS—it highlights several things, and if we were to truncate that and to summarise it, so to speak, the main things it highlights is the fact that this is not a problem and somehow we’re trying to fix something that doesn’t need fixing. It’s also got no information. It states, through the CIS, that there’s almost no evidence to base this on. There’s no evidence to show us that the 10 percent fee that currently exists isn’t doing its job, that it isn’t covering the costs of making those recoveries. This is just a means by which this Government has gone, “I tell you what: here’s a bit of something that hasn’t been increased for a while. We’ll hoick that up 40 percent, and that’ll make us a little bit of extra money because we’ve got to pay for those tax cuts.” that Nicola Willis and Chris Luxon bet their reputations on.

The other thing is that clearly this is rushed, isn’t it? It’s rushed and it’s unnecessary. As my colleague the Hon Duncan Webb said earlier, it’s, essentially, nickel-and-dime stuff, isn’t it? It feels a bit trivial. It feels quite trivial to even be having these conversations, but yet here we are.

The other thing that the CIS makes clear is that, as I said, there’s limited information—certainly limited financial information above which we would be making those decisions. So, clearly, this is kind of a pre-determined thing just to find money, so it certainly doesn’t make sense. The other thing that I think was quite notable, when you look through the information, through the CIS, is that I think you have to be really wary, because it’s kind of a move to shift the recovery of fines—well, you’ve got to ask yourself: when the Government is making comparison between what the private sector is doing—and by the private sector we mean debt collectors—and when they’re saying, “OK, what are debt collectors doing out there? OK, they’re getting away with this much, let’s see if we can kind of, you know, meet them.”, as my colleague the Hon Kieran McAnulty said earlier. It’s like the State’s joining the market—the debt collector market.

Arena Williams: Or the mafia!

Dr TRACEY McLELLAN: Or the mafia. But I think the question is, once you get over that and think to yourself, “Where could this be leading?” Is it a move to shift the recovery of fines completely to that private sector? Is the Government, at some point, just going to go, “Let’s just quit with this.”, and—

Hon Rachel Brooking: There’s a theme—there’s a theme!

Dr TRACEY McLELLAN: —yeah—just head in that direction altogether? So, you know, if the mandatory charge of Government collection is outrageous, or it’s either an unfair levy—or it’s kind of like privatisation by stealth, really, isn’t it, and that’s something we have to keep our eye on.

As I said when I first made my contribution, the percentage amount bears absolutely no relationship to the amount of the fine, and I think that’s something also worth noting. So, regardless of whether the fine is $100 or it’s a thousand dollars, the percentage amount bears absolutely no relationship to that amount. Again, when we look at the CIS, it totally avoids whether the increase is needed for efficiency. This Government, for all their flaws—and they certainly rate themselves as economic geniuses, and we’ve never really seen much proof to be able to highlight the efficacy of those claims. But for all of their flaws, they do at least talk about efficiency and the need to favour efficiency and the need to look towards efficient uses. This thing does absolutely nothing in that direction. It’s yet another example of where efficiency is just a buzzword, and when the proof comes to the pudding, it’s all just hot air and nothing actually happens.

I think that when we think about—

Hon Kieran McAnulty: They want to go home.

Dr TRACEY McLELLAN: They do want to go home. But when we think about the progress of this bill, obviously this is the second reading and we’ll be heading into the committee of the whole House after this, and my colleague Arena Williams has already intimated that she’s got several pressing questions that she wants to ventilate and to prosecute, and she’s going to, I think—

Hon Kieran McAnulty: And she will.

Dr TRACEY McLELLAN: And she will. She’s looking forward to doing that very much, I can imagine, and it’s a meaty thing to have to talk about!

But here we are, coming towards the end of the second reading, and, again, let me just highlight: this is about choices. There were always choices in this Budget. We have to think about this stupid little piece of legislation, this stupid little bill, in the context of the wider Budget, which I think most New Zealanders will be sitting there tonight feeling pretty disappointed in what they were sold and what the reality was. So, on that basis, I certainly do not commend this bill to the House.

CAMERON BREWER (National—Upper Harbour): Here we have the Labour Party suddenly concerned about costs! It’s suddenly concerned about costs, but what did they vote against just a couple of moments ago? The tax cuts that 83 percent of workers would benefit from; 93 percent of households would benefit, and they voted against tax cuts for low to middle income workers.

As Mr Meager has said, this is a small cost recovery adjustment, making this small amendment to the Public Finance Act 1989. The previous speaker, Dr Tracey McLellan, says they can’t justify it. Well, I’ll tell you how they justify it: the fee has not increased since 1989. The increase from 10 percent to 14 percent is much, much less than inflation since then—136 percent. This is very, very small. I commend the bill.

INGRID LEARY (Labour—Taieri): Thank you, Madam Speaker. Just for those who are watching at home, you may not be able to hear the kind of tone in the House or the gibes from the other side, but it’s a bit of a shame when they are—it feels like a bit of a classroom or a school assembly, and people are shouting and joking, when actually the legislation we’ve had in the House today has got real impacts on real people.

I’d like to acknowledge, as the spokesperson for seniors, retired couples, who are the biggest losers. I am going to bring this back to this bill because they are impacted by this. As Dr Tracey McLellan said, they were expecting $13 a week before the Budget. They’re now going to be getting $2.15 each a week if they’re a superannuitant couple. This bill—even though it’s a silly little bill—it’s actually tax by stealth. It will impact those people. It’s quite desperate, because they haven’t been able to fund their tax cuts, despite—it was bizarre when somebody in the House today said that they didn’t use borrowing to pay for the tax cuts, because, in fact, they have borrowed $12 billion to pay for $14.7 billion of tax cuts. So they clearly haven’t read their legislation.

This bill is bad law and it’s unfair. The reason it’s bad law is because, first of all, I’d say it’s a tax, but technically they’re calling it a levy. Now, it’s not a levy. If you look at it technically, it’s a fee, because it is targeted. A levy cuts across users and a fee is targeted. But it’s, really, at the end of the day, a tax.

What irks me is that this applies to strict liability offences. This means that when somebody goes down the road, parks their car too late, they are guilty until proven innocent. It reverses the burden of proof. Now, that’s really unusual in our parliamentary system. So that in itself should be a reason why this should be going to select committee. It’s a reason why it shouldn’t be done under urgency. Any time that we’re using urgency and this process to bring into being a change where somebody is guilty till proven innocent on the burden of proof is just bad lawmaking when it comes to jurisprudence.

It’s also the impact that it will have on marginalised communities, including Māori and Pacific. The costs will be passed on. There is no way that councils are going to sit here and have the Government do their big reach into their pocket and do their money grab and not pass those costs on. They will pass them on to the people who can least afford to pay it. Now, if we look at who’s been really impacted by these cuts that the Government has made by these types of bills, it is, as the Hon Kieran McAnulty—[Interruption]

ASSISTANT SPEAKER (Maureen Pugh): I’m sorry to interrupt the member. It is becoming difficult to hear from up here. There are quite a few separate conversations going on in the Chamber.

INGRID LEARY: Thank you, Madam Speaker. Would you give me another five minutes?

ASSISTANT SPEAKER (Maureen Pugh): I’ve stopped the clock. I’ll restart it now.

INGRID LEARY: I’d be very keen to extrapolate. I’m sure that people couldn’t hear any of it, to be honest. But anyway, I’ll carry on.

The Hon Kieran McAnulty talked about the rates going up and the fact that this is another way of the Government kind of throwing councils under the bus, because it will be councils that will increase their fines, that will pass that on to the people who are fined. When I look at what’s happening in my electorate in Clutha, we’ve got the mayor there saying, basically, the way the rates are going up because of what’s happened under three waters and the fact that the water reforms that this Government is requiring councils to now pay, when we had a solution for them—those rates are going up between 14 and 20 percent. Superannuitants in my electorate are paying up to 20 percent of their income into rates. So when I talk about superannuitants being the biggest losers under the Budget, and I talk about the impact that this type of legislation has, it’s very, very real for them. The costs that will be passed on because they maybe get a fine or they pay their fine slightly late and costs are added, there is no way that councils will not pass those on.

So this is more bad news for superannuitants. It’s more bad news for councils, who are going to seem like the bad people here when, in fact, it’s the Government throwing them under the bus. Why? Because they didn’t cost out their tax cuts, because they’re desperately trying to find little pinchy ways to try and get their coffers adding up, and they’re doing it in urgency when they haven’t thought through how they’re going to get a decent amount of money in a proper legislative way. It’s bad lawmaking, as the Hon Dr Duncan Webb has said. There is no rationale for the 10 percent that’s been justified through the private market. In fact, if we look at what the cost recovery impact statement says, it says that a fee is only justifiable when it’s fair and appropriate. So is it based on the dollar amount? Is it based on the volume? There’s no justification. There’s no evidence. It’s a silly piece of law and I’m not supporting it.

PAULO GARCIA (National—New Lynn): Madam Speaker, thank you. So many words have been said. It’s a simple bill. Ten percent to 14 percent; 4 percent increase in Crown retention. The Opposition say that “This is trivial; it’s small money.”, but to a fiscally responsible Government every dollar counts. We commend this bill to the House.

RACHEL BOYACK (Labour—Nelson): Thank you, thank you, thank you. Now, it is quite bizarre that the day after the Budget, following what was a very long debate on the tax bill, this is the second bill that the Government puts up. This is what they want to put forward for New Zealanders. This is why they’re here on a Friday night. It’s because they want to charge people more for the cost recovery of their parking fines. I mean, we’re really, really focusing on the big issues, aren’t we?

I mean, they could have put a bill up tonight about how they’re going to move forward on funding cancer drugs. That would have been a better option. They could have put a bill forward about how they’re going to fund more public houses. That would have been a good bill. But no, none of these things. Instead, they have a parking ticket tax to bring to the House on a Friday night. I hope those people who are listening on a Friday night will be hearing that the Government’s major priority after tax is to add a new tax through a parking ticket tax.

Hon Dr Ayesha Verrall: Those people should write to their MP.

RACHEL BOYACK: They should write to their MP. I mean, one person has actually written to me tonight, calling the tax cuts a complete laugh. I won’t go into the full email because it’s actually quite depressing for that person. That is the kind of person who could well and truly be hit by this increase in the cost recovery of a parking ticket.

So the Government’s priorities are all over the shop. Then they’re trying to blame cost pressures for this. Now, what’s caused the biggest issue around cost pressures? Just looking here at the cost recovery impact statement, the biggest issue actually is cuts—cuts from that Government side where they’ve said, “What we’re going to do is we’re going to borrow and we’re going to cut so that we can give out unaffordable tax cuts to landlords.” Then what they’re going to do is introduce a nice sneaky little bill straight after the income tax debate called the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill. What this bill will do—it will create this nice little parking ticket tax and it will enable the Government to take an extra 4 percent where it collects fines on behalf of local bodies.

Now, this is a Government that has, as other speakers have said, gone around the country and said, “Local government, we love you. We’re going to do some things for Auckland’s water. We’re not quite sure how it’ll work for the rest of the country, but we’ll probably figure that out later. Let’s see what happens. We’re going to help you out here, but oh, by the way, here’s another little cost. Here’s another little cost for you to have to gather more revenue for us.” Actually, when I talk to local councils, one of the things I hear is the frustration from councils when costs are imposed unnecessarily by central government. This is actually an unnecessary addition to costs that councils have to collect on behalf of central government. I actually don’t think it’s OK.

When you look further at the cost recovery impact statement—you know, we’ve heard from people. I’ve had emails from people who are literally only getting $2 a week in their tax cut. It is those people who will be disproportionately affected, if you read through. [Interruption] It’s interesting that the other side love to have a bit of a chat when we’re chatting, but they don’t actually—I mean, when they do their own calls, they could stand up and say all these things in a call, right? I mean, it’s like you’ve probably done a 10-minute call of interjections. Why don’t you just do the 10-minute call? I mean, it’s just a suggestion.

One of the things that the cost recovery impact statement has made really clear is that this bill will disproportionately impact low-income New Zealanders. Actually, that’s really serious, because a lot of the changes that have been made through this Budget will disproportionately impact low-income New Zealanders—things like removing free prescriptions; things like another transport matter, things like removing free public transport for young people. All of these things are placing the burden on to people who actually have lower incomes disproportionately while they’ve given $2.9 billion worth of tax cuts for landlords. So it just shows the Government’s priorities. I think the Government priorities are massively, massively out of whack.

What it also made clear, when you read through—I mean, you could, instead of talking amongst yourselves, you could actually have a read of this cost recovery impact statement. It’s quite interesting. One of the things is that the increase has been rushed. There has been limited financial information for this process. So it’s like the Government has thought to itself, “Heck, we’ve promised these tax cuts. We’ve staked our claim on it. We’ve said we’ll resign if we don’t do it.”

Hon Members: And we delivered.

RACHEL BOYACK: Oh, you did? Yes, you did. Seeing as you’ve mentioned the delivery of the tax cuts, I might just mention this person who said to me, “A complete laugh. As a single person living alone in hardship, I will get little to no benefit. With the reinstatement of prescription charges I am losing even more money. I have eight to 10 drugs each time, at a charge of $5 each item—more nails in my coffin. I’m struggling and just hate life at the moment. I’ve worked hard for many years. Everything I have had is nearly all gone.”

Maybe the members opposite actually should listen to the response from the New Zealand public to the changes that they have introduced. Again, I say, after making changes that actually proportionately impact on the wealthiest, those who own multiple investment properties, they then said, “The next thing that we’re going to do is introduce this nasty little parking ticket tax.”

I also remind members opposite that this Government promised no new taxes, and yet transport seems to be the one where they’re thinking, “Hey, we could find a few little curly ones here.” For some reason, it’s transport that’s getting hit with these. We’re going to pay more to register our car. We’re going to have some massive increases in the future into some of the levies that are taken, and then we’re going to do this nasty little thing for people who get a parking fine.

Now, I’ve had parking fines—[Interruption] Absolutely. I know; very outrageous. I mean, come on; who in this House hasn’t had a parking fine?

Hon Member: Celia.

RACHEL BOYACK: Who hasn’t? Who hasn’t?

Hon Member: Celia only rides bikes.

RACHEL BOYACK: Oh, Celia Wade-Brown hasn’t had a parking fine. Well done, Celia Wade-Brown. That’s impressive. I mean, I’ve had parking fines. Recently, my husband got a phone call from the Ministry of Justice to say that he hadn’t paid a parking fine from around 20 years ago, which he’d never actually seen.

Hon Member: Oh, shame.

RACHEL BOYACK: Oh no, he’s a very honest man, my husband. Actually, it ended up that he had paid it, but it hadn’t made its way through the system. But the reality is that many, many, many of us—many, many, many of us—have had parking fines. We know what happens when we overstay in our car park. As MPs, our meetings often go over. Then when those situations occur, if you don’t pay your fine on time, that’s when the cost recovery costs come along.

We know that it’s people on low incomes. We know that it’s those people who live week to week. We know it’s those people who think, “Actually, it’s going to be tough to fill the car this week. It’s going to be tough to pay the rent or the mortgage this week.”—those are the people who will often make the decision that they’re actually going to delay paying the parking fine. Unlike us, if I get a parking fine, I’ll pay it within a day or two, because I’m diligent—very, very diligent. But it’s also acknowledging that I have the ability to pay for that parking fine as soon as I get it.

That email from my constituent tonight was really sobering, because it just showed that this Government has its priorities all wrong. It’s basically blaming cost pressures on departments that they have cut the budgets for and they’re moving to more of a user-pays model with this lovely, lovely little parking ticket tax where they had promised no new taxes. Instead, what we’re seeing is a priority from this Government. As soon as they passed the income tax Act tonight, they said, “Right, we’re going to get into this really, really, really important bill.” This is the most important thing for this Government to be working on on a Friday night. It’s those most vulnerable people who will be disproportionately affected, who don’t pay their fines on time, who will end up having to pay significantly more at a greater cost to them and to councils. It’s a terrible little bill from a terrible Government that’s not standing up for working people.

RIMA NAKHLE (National—Takanini): Thank you, Madam Speaker. Look, this bill, the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill, has been referred to by people across the floor as a pathetic little bill—trivial, nickel-and-dime stuff, a silly piece of law. Why? Because it’s generating about $400,000 only, they say. I mean, that may be less than what they spent on a slippery slide once upon a time, but $400,000 will go a long way to community organisations. $300,000 went a long way recently for the Takanini Gurdwara in my electorate of Takanini. It refurbished their kitchen, which feeds thousands of people per week. It’s not trivial. It’s not pathetic. I commend this bill to the House.

A party vote was called for on the question, That the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill be now read a second time.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Bill read a second time.

DEPUTY SPEAKER: This bill is set down for committee stage immediately. I declare the House in committee for consideration of the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill.

In Committee

Clause 1 Title

CHAIRPERSON (Maureen Pugh): Members, the House is in committee on the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill. Members, we come first to clause 1. This is the debate on clause 1, the title. The question is that clause 1 stand part.

Hon SIMEON BROWN (Minister of Local Government): Thank you, Madam Chair. This bill is named the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill because that is exactly what it does. Ultimately, that is the bill, which seeks to increase the amount which recoverable from the collection of fines from 10 percent to 14 percent and is very clear: what’s in the tin is what’s on the tin.

Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Madam Chair. Well, I’m afraid I can’t agree with the Minister on that front: it doesn’t really tell you anything that it does. The Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill sort of points loosely towards collection costs, but it certainly doesn’t actually say what the bill does, which is to increase costs.

You will no doubt have seen, and I’m imagining you’ll agree with, my Amendment Paper on that matter. My suggestion is that we actually do call it what it is, which is the “Public Finance (Increase of Charges for Local Body Debt Collection) Amendment Act 2024”, because that’s exactly what’s going on. We are increasing charges being imposed on local bodies, and I think it’s important to recognise that this isn’t the case that the Crown, other than the provision of a court service, which is what every citizen is entitled to have at their disposal—this isn’t the provision of any particular service. It’s actually a bit fatuous to say that this is a charge for services delivered, because the court framework is just a critical part of Government infrastructure. We’ll be starting charging people for parliamentary services next—it’s that kind of constitutional significance.

So, really, I think if we’re going to debate the title—and we are—then the appropriate title is to actually refer to the fact that this is a charge for the use of the judicial system as a means of debt enforcement, and we’re increasing it. You could, of course, just say that it’s a tax on local bodies—and we’ve said before, it’s, essentially, a parking fine tax. The parking fines are bad enough, but I know that, certainly in my electorate, Wilson Parking has a lot to answer for. But, in fact, this is of the same ilk in the sense that it’s adding an extra layer on top of the additional charges. So we really should call it what it is and not hide behind some weasel word “Public Finance (Collection Costs)”; it’s the “Public Finance (Increase in Collection Costs)” and that’s absolutely what we should be calling it.

Of course, we could call it, as I’ve said, a parking fine tax or a money grab, but I think I have heard come from the Chair from time to time that titles of that nature, whilst I think it was deadly serious, sometimes the Chair sets them aside as being perhaps ironic or something like that. But I know the wise Chair that we have now surely wouldn’t be doing anything like that. Certainly, an increase of charges for local body debt collection is absolutely straight down the line, and I hope that the Minister will, in fact, agree to that change.

Of course, I have a number of other Amendment Papers. I don’t think they’re on this clause at the moment, so—but you never know, I might have one there and I know some of my colleagues want to speak on this matter as well.

INGRID LEARY (Labour—Taieri): Thank you, Madam Chair. Look, I don’t want to disagree with my very learned colleague the Hon Dr Duncan Webb, but I do have a little bit of an issue with the word “collection” and also “costs”, actually, and I wonder if the Minister can explain why, in the title, the word “collection” would be appropriate.

When I think of the word “collection”, it involves an active activity; it’s about collecting; it is about doing something. Whereas, my understanding of this bill is that the Crown is really a passive recipient of money that is being gained through other means—I mean, certainly through the judicial process, as Dr Webb has alluded to. So I just am not sure that the word “collection” is correct. It’s possibly a little bit misleading, because it implies that there is some kind of active activity happening that is going to justify a change in the Public Finance Act. We must remember that the Public Finance Act is one of the key foundations of our financial system. It’s not something we do lightly. So if we’re going to have bills that change that principal Act, I do think they need to be accurate.

The other word that I actually have issues with as well is “costs”, because “costs” implies that there is a measurable evidence base for the retaining, rather than collecting, of the money that is being accrued. When I look at the cost recovery impact statement, it definitely says that there is no evidence for that. So trying to find what to call that would be something I’d like to ask the Minister. Is there a better word that basically describes what is happening? I don’t think “cost” captures it. Perhaps the word “levy” has been used. “Levy” isn’t accurate either, because it is a fee and that was discussed in the speech, and I’m sure we’ll come to that in the relevant parts, but I’m wondering, actually, if we just replace the word “costs” with “tax”, because that’s actually what is happening here.

So, although I haven’t tabled an amendment, I wonder if the Minister would consider changing the title to Public Finance (Fines Tax—Budget Measures) Amendment Bill. So we would take out the word “collection”, because, as I said, there’s no active collection going on, and take out the word “costs”. There isn’t anything that can be evidenced numerically; it is a retention of some money, and, therefore, in my mind, the appropriate nomenclature for that would be “tax”. So I do wonder if the Minister would please consider mine, even though I am very sorry that I didn’t manage to get time to table the amendment.

Hon SIMEON BROWN (Minister of Local Government): Look, I thought the member’s question was very good in terms of why not use the word “tax” rather than “costs”, and I’d like to explain to the House why the word “costs” is more appropriate. It costs the Government money to do activities, and the activity that it is doing here is collecting fines on behalf of local authorities and other entities, and that cost has increased over time. So, as part of good Government, it’s appropriate that we have a cost recovery model which ensures that the costs that it costs to run the service are recovered. This bill is doing that—exactly that. I just sort of feel like, in that last 30 seconds or a minute, I’ve explained why the last six years have been such an appalling waste of money by that last Government. This Government is bringing back appropriate expenditure, appropriate governance, and appropriate cost recovery models. That is exactly what this bill is doing. This small but important bill is another measure in terms of doing that so that we have better governance in New Zealand.

Dr LAWRENCE XU-NAN (Green): Thank you, Madam Chair. Thank you for the opportunity to take my first call on this bill, the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill, in the committee stage.

I appreciate what this bill is trying to do in order to recuperate some of the costs generated by the court and by local authorities. Based on what we see here, in terms of the cost recovery impact statement, it is projected here that revenue through court fines is budgeted at $111 million a year by the Ministry of Justice, and the revenue from the filing fees—these are two separate fees we’re looking at. One is the fines recovered or the fines imposed, and the other one is the filing fee. Now, I would like to know from the Minister what sort of modelling he has done when it comes to the collection of the fee itself.

Now, the reason I mention this—and this is a little bit outdated; I can only imagine it has increased—is that the previous report said that Kiwis, and also, in this case, tourists—I would like to know how this bill would affect tourists. But Kiwis and tourists have evaded $156 million in unpaid fines over the past decade, and this is from 2009 to 2019. Across Aotearoa, district and regional councils have referred, at that stage in 2019, $471 million of fines to the Ministry of Justice since 2008, and 33 percent of those fines were never recovered.

So, based on the cost recovery impact statement and the estimated additional revenue from the proposed changes, I would like to ask the Minister: does this, first of all, factor in to the amount of fines that were never recovered in the first place? Auckland, of course, dwarfs other councils. In this report, $66.5 million of fines were left unpaid since 2008-09—so within a decade. So that’s a really important question. The second branch of that question is what I mentioned before: a lot of the time, these fines are incurred by tourists who will come to Aotearoa, and when they leave—and this goes to that—has that also been considered as part of the estimated additional revenue that has been proposed? So those are the first two questions.

When we are looking at this bill, it also talks about collection by not only local authorities but also other organisations, and I would like to know from the Minister what conversations have been had with other organisations who are also currently collecting some of these fees, and whether they have agreed—if they are either a State-owned enterprise or if they are indeed other agencies or private enterprises, etc.—whether any other organisations have OK’d the increase from 10 percent to 14 percent of the fee that is going to be retained.

So those are my initial questions. There are other questions on specific areas as well. But thank you very much, Madam Chair, for giving me the opportunity. But the question here is—

Hon Members: Madam Chair!

Dr LAWRENCE XU-NAN: Sorry, I still do have a minute and 26 seconds. Just to recap, the first question is around whether—

Arena Williams: It could have gone to select committee.

Dr LAWRENCE XU-NAN: It could have gone to select committee. The first question is around whether the estimated amount of revenue that is proposed here has factored in to the amount that is going to be lost from fines left unpaid, both by locals but also by tourists. Also, the second question is around whether other organisations agreed to this.

One of the things that I would also like to point out, which the Minister just mentioned before—I appreciate and understand that you’re trying to be fiscally responsible and trying to recuperate some of these costs—but may I also point people to the Vote Courts document that says, for support of the District Court, there is also an $8.5 million increase in the response to harm, as well as a $3 million increase to District Court funding and a tougher approach to sentencing.

So when we are looking at something like this, if you’re trying to balance the costs of the court and the estimate you’re using, they’re not actually recuperating it, because you have now just gone and spent it on all of these other things. I am also kind of interested to know from the Minister what his thoughts are on some of these rebalancing of the costs.

CHAIRPERSON (Maureen Pugh): Before I take another call, I’d just like to remind members that this is a clause by clause consideration. It is not part by part, as you were probably expecting. So clause 1 is a more fulsome debate. I refer to Speaker’s ruling 127/1.

JAMES MEAGER (National—Rangitata): I move, That debate on this question now close.

CHAIRPERSON (Maureen Pugh): As I’ve just said, it’s a more fulsome debate than a clause by clause debate. So we have got a bit more material, I think.

Dr TRACEY McLELLAN (Labour): Thank you, Madam Chair. I do have an Amendment Paper on clause 1, so I would have felt quite aggrieved if I wasn’t able to speak to that. But old “Eager Meager” has attempted to—

Hon Members: “Eager Meager”—“Eager Meager”!

Dr TRACEY McLELLAN: My apologies, it’s James Meager, and I should use your full name. But that’s all right.

Cameron Brewer: James “Eager” Meager.

Dr TRACEY McLELLAN: James “Eager” Meager. But in all seriousness—

Hon Rachel Brooking: Is that going to be the name of the bill?

Dr TRACEY McLELLAN: I have got a suggestion for a retitle of this bill, but, no, that is not the name of the bill. I suspect he would like that a little bit too much. With all due respect to my colleague the Hon Dr Duncan Webb, who has also got an Amendment Paper—I know he made a suggestion and I know at the time when I heard it, I thought that was perfectly reasonable. To be perfectly fair, it’s gone in one ear and out the other, because I think I’ve got a better title.

Now, also with respect to my colleague Ingrid Leary, I thought she made a couple of good points which I hadn’t quite thought of. I’ve made a couple of notes here, because I particularly underlined the word “collection”. I have tabled an amendment, but if I had heard your comment beforehand, I may have thought about that twice because I do believe that “collection” is an active word, it is a doing word, and I’m not entirely sure that I necessarily would have chosen that, but it’s still a much better option than what the name is before us now.

So the other part that I think I’d like to make mention of is this concept of making money. So the amendment that I have before me is to replace clause 1 with “This Act is the Public Finance Making Money Off Debt Collection Amendment Act.” When I say, “making money”, I think, as has been mentioned in previous contributions during the various stages—which I know always feel like they’re lumped in together when we go through urgency, because they are all lumped in together, and we don’t get a chance to let that settle a bit and to have a little bit more thought as we go through this process. But such is the nature of urgency, and it’s always a bit of a conundrum, isn’t it, when we talk about “urgency”, because it makes it seem like it’s something that’s actually quite urgent and important, but this bill obviously isn’t in line with that.

Making money is in line with this because this is what it’s about. So I think that I disagree with the Minister when he says that what’s written on the tin is what it does. I think this “making money” part that I’m suggesting needs to have a more prominent position in the title of this bill. Now, when we talk about making money, obviously, if we look through the various documents that were imparted to support this bill, there was a table that said, I think, that it was $446,000 in its first year, which, you know—$446,000 is a little bit of money in terms of the Government’s budgets. It’s not a huge amount of money in the scheme of things. It’s certainly not up there with the $2.9 billion in tax cuts for landlords, for instance. But nevertheless, it is some money and I think because of that, in the title, it should say something along the lines of, as I’ve suggested, “This Act is the Public Finance Making Money Off Debt Collection”.

Now, the other thing that I would like us to think about when we think of what an appropriate title would be when we think of clause 1, is the fact that the existing 10 percent, along with the filing fee of $30, from memory—and remembering some of the things that are being raised are being raised by as much as, like, 83 percent. So the “making money” part here shouldn’t be understated. But that already makes the Government’s position as a debt collector, so to speak—or the Government’s position as using the judicial system as a means by which to collect debt—a little bit uncompetitive as it is. So I think the addition of “making money off debt collection” just specifies that a little bit more correctly that the Government is still in that business.

So I wonder if the Minister would consider that. I think it suits the bill a lot more and I’d be interested in hearing any other contributions from colleagues who may have other, similar ideas.

Hon SIMEON BROWN (Minister of Local Government): Thank you, Madam Chair. I just want to respond to the member, the list MP from Banks Peninsula. The tabled amendment was that the Act is the “Public Finance Making Money Off Debt Collection Amendment Act”, which could not be anything but what this bill is doing. It’s simply about cost recovery and about making sure that the system is able to actually pay the bills. Actually, that means ensuring that there’s enough funding. As it says in the general policy statement on the bill, which I assume the member hasn’t read yet, the increase is to ensure that fines “from amounts of fines recovered for offences” can be actually just covering the cost. I mean, that is ultimately what this bill is doing. So I’m not sure what the last Government did for the last six years, but clearly they borrowed, spent, taxed, but, actually, this is simply about making sure that the service—

Chlöe Swarbrick: What about localism, guys?

Hon SIMEON BROWN: I’m not sure who that is screaming across the Chamber, but I did hear the question—

Chlöe Swarbrick: Oh, big boy, Simeon.

Hon SIMEON BROWN: —and the answer to the interjection—

CHAIRPERSON (Maureen Pugh): Order! Refrain from getting personal with the remarks, please.

Hon SIMEON BROWN: Thank you, Madam Chair. The answer to that question is that the Crown is providing a service for local government. It costs more money to run that service than it used to because of the inflation left behind by the last Government and so we’re ensuring cost recovery.

Hon KIERAN McANULTY (Labour): Thank you very much, Madam Chair. I do appreciate that you had a lot of choices there and you chose me, and I appreciate that. Thank you.

James Meager: This sounds like leadership-thinking.

Hon KIERAN McANULTY: Keep it up. We’ve got all night. It’s all good; we’re in no rush. [Interruption] We’re in no rush—keep it coming. But it’s interesting that it does appear the Minister also wishes to keep this debate going, Madam Chair, because, as you know, and as many others know in this Chamber, if a Minister chooses to respond to a genuine query, like that as was proposed by Dr Duncan Webb, with a political comment, it only extends the debate. So if that’s how the Minister wants to play it, that’s absolutely fine.

I also have a genuine query. As much as I support the proposal made by the Hon Dr Duncan Webb, who always plays with a straight bat—he’s talking about an increase in charges for local body debt collection. It’s a fair cop. But what I’ve heard a lot from the Minister tonight is “cost recovery”. What I haven’t heard from the Minister tonight is the term “collection costs”, and I find that interesting. So I guess my query to the Minister is: if he really wants the title of this bill to, as he says, reflect what’s in the tin, would he consider changing the title of this bill to the “Public Finance (Cost Recovery) Amendment Bill”? I’ll explain why I don’t believe that what is currently there is appropriate, but why I think, in the spirit of trying to work together, that would be an appropriate title. Well, the first and most obvious point is that this is the justification that the Minister himself has used on a number of occasions. So, surely, if that is the justification behind this bill, then he may as well have the title reflecting that.

The issue that I have with the current title is that it’s got the inclusion of “Budget Measures” in there. Now, throughout the debate, in the first reading and up to now, this side of the House has made the point that this is a proposal from the Government to try and fill the gap that has been created by their tax cuts in the Budget. Pretty much every contribution from the Government has said “No, this has got nothing to do with that.”, and, yet, in the title, it’s got “Budget Measures”. So if they really do think that and it isn’t actually to do with the Budget, then let’s take that out and just say “cost recovery”, and then it will say what the Minister says that the bill says. We might still dispute it, but the whole point of the committee of the whole House stage is that in the absence of a select committee, the committee has got to try and find ways to improve it. At the moment, I don’t believe the Minister’s argument that the title reflects the intention.

In fact, I actually don’t think that if it were called the “Public Finance (Cost Recovery) Amendment Bill” it would either, but it would certainly reflect what the Minister’s saying about why this bill is needed.

CELIA WADE-BROWN (Green): Thank you, Madam Chair.

Hon Member: How many parking fines have you had?

CELIA WADE-BROWN: I do feel that I should correct the situation in the committee and admit to parking too long in Masterton once. So I’m not suggesting that the title be amended to “Sympathy for Overstayers”, but there are some ways that we could improve the title. I wonder if the title should be “Keeping Councils in the Dark about Increasing the Costs to Councils.” It’s been clear that local government—and presumably none of the mayors learnt of it till they read about it. I wonder if the Minister of Local Government or the Minister of Transport or somebody could have actually talked to them.

On the other hand, maybe it should be called the “Discouragement of Enforcement Bill”, because if we make it more expensive for councils to enforce—and it’s not only about turnover of parking; it’s also about safety. Let me have a look at the list, because we could put them all in the title, but we probably won’t. If it’s harder for a council to enforce parking on or near a pedestrian crossing, if it’s harder to enforce parking on a bus-only lane, if it’s harder to enforce inconsiderate parking, who’s going to suffer? Well, it will be the people that are most disadvantaged, that are generally ignored by this Government—people in wheelchairs, and children walking to school—having to walk out on to the road.

This bill could be called “Keep Local Government and Transport in the 20th Century”, because that’s the last time that some of those fees were increased. While I have immense sympathy for my colleagues on the right—maybe that wasn’t the best phrase—if they’ve ever received a parking fine, they can avoid it with better vigilance to time keeping and by looking not to block people, but the people most disadvantaged by a lack of enforcement would still suffer. So I’ve offered some alternative bill titles. I look forward to the Minister’s response.

Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Madam Chair, and thank you for your guidance, actually, just directing us to the fact that given that this is being done clause by clause, the title clause is the appropriate place for the more kind of wide-ranging debates, because there are some wider policy issues. This bill hasn’t been to select committee and we’ve got this only today, in parliamentary time, so there are a few questions I would like the Minister to answer. They’re quite serious questions.

The first is: how much does it cost the Crown to run this recovery framework, and how much of it is recovered through the existing system? So, basically, what’s the shortfall? Because you’ve talked about there being cost pressures, and, in an earlier speech, I suggested that it was actually just the Government looking for a bit of money because they’ve got a tight Budget. But you’re telling me that that’s not the case, so I guess I’m calling the Minister on this and saying, well, show me what the figures are. So what are the actual costs and what is the shortfall? I’d just ask two things first, if I may—so either my colleagues can speak, or you can respond.

The second thing is that I’m a bit perplexed, because in the regulatory impact statement—in the cost recovery impact statement—I understand why the 2024-25 recovery is slow, because it’s only half a year. But your 2025-26 recoveries of this additional 4 percent are $466,000 and across into 2028-29, that rises to $686,000, and, given that it’s a flat rate on parking fines and other fines, I can’t see where the revenue growth comes from because I can’t see that there’s more fines being imposed, unless the Minister is perhaps anticipating increasing the amounts of the fines—in which case, that money would be 4 percent of a greater sum. So if he could explain to me how he reaches that increased revenue, that would be good.

I do think that this is part of a wider framework, including increased court costs, so I do want to ask some questions about that. But in the spirit of having an exchange, I won’t go with that; I’ll give the Minister an opportunity to respond to those matters.

FRANCISCO HERNANDEZ (Green): Thank you, Madam Chair, for allowing me to take my first call on this bill. I have three questions for the Minister, which I’ll then follow with some contextual statements and some figures on why I’ve asked these questions.

My first question to the Minister is: how many Ministers and how much time was spent on this bill in total in terms of drafting, in terms of meetings, and in terms of everything to do with this, the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill? My second question is: how many backbenchers and how much time was spent in total in meetings and consultations, and whatever other aspects there are of this Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill? My final question is: how many officials and how much time was spent deliberating and drafting and working on this Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill?

I ask that question, Minister, because according to page 9 of the regulatory impact statement, the additional anticipated revenue raised is meant to be $285,887. Throughout this time while we’ve been in the House, I have counted the number of backbenchers while we’ve been debating this, and I’ve counted the number of Ministers. Assuming that it takes about five hours to get through this process, we will have spent about $10,000 just debating this legislation alone.

So I’m really curious just to hear your figures, because I reckon it’ll end up costing $30,000 to $50,000 of hard-earned taxpayers’ money to pass this nothing bill—this bill that has no ambition and no substance. It’s an absolutely nothing bill, and we’re wasting time deliberating on it. So let me hear from you, Minister. Thank you.

Hon SIMEON BROWN (Minister of Local Government): Look, I thank the members for their questions. As they may be able to—oh, sorry, I’ll bring the microphone down. Is that better? Thank you.

Hon Member: Stand up.

Hon SIMEON BROWN: Oh, I’ve got to stand up—sorry, I’ll stand up. I’ll stand up straight—is that better? I should stop slouching, I’m sorry. Good questions there from the members. Obviously, this bill does one part of the changes that the Minister of Justice is proposing. The bill deals with the additional anticipated revenue from increasing the retainings based on increase to 14 percent from 10 percent on 1 July 2024.

As can be seen in the cost recovery impact statement, there’s also additional revenue from increasing the court costs and filing fees, additional revenue collected through increase to enforcement fees, and, as members will be able to read, there is a total on the bottom which outlines the total increased fees that this measure is increasing.

Ultimately, the reason for increasing the anticipated revenue from the retainings is because there is increased costs in recovering fines. As outlined in the general policy statement, the increase is to ensure that this can cover the costs, which have increased over time, and it will help recover Crown costs. That is good public policy, to ensure that good cost recovery is implemented across the activities that Government does. That is what this bill does.

Hon KIERAN McANULTY (Labour): Thank you very much, Madam Chair. I appreciate that a lot. I didn’t think I had a chance, because I’m not sure if you’ve noticed, Madam Chair, but I’m not the tallest bloke and Duncan Webb was standing right in front of me, but you picked me, so thank you.

While I’m still waiting for a response to what was a genuine and sincere proposal for an alternative title from the Minister, I do have a question. A question that, actually, I think touches at the heart of this and certainly at the heart of our concerns that we’ve raised, and that is what level of consultation was made with the local government sector.

Now, the reason I ask this question and that I’m so interested in this is it’s actually the exact same question that I asked the Minister during the committee stage of the water reforms repeal bill. I asked the question of the Minister, by my count, six times. You know what’s funny? He didn’t answer once. That was interesting because I had a suspicion throughout that the Minister actually hadn’t widely consulted the sector leading up to that on that specific proposal within the bill. As it turns out, it appears that that is the case.

So I think it’s important that the committee gets a response from the Minister around this, because, ultimately, it is the local government sector that is affected by this. We understand the rationale—whilst we do not agree with it, we get that the Minister wants to do cost recovery, hence my suggested alternative title. At the end of the day, it is the local government sector that loses out from this. They lose where the Government gains, regardless of the justification or the reasons.

Now, if it is indeed the case that the Minister hasn’t consulted with the local government sector, that would be a shame indeed. In fact, it would be an outrage to propose a bill under urgency as part of the Budget measure whilst they swear in their contributions that it isn’t part of the Budget or anything to do with tax cuts, even though it’s in the title—although I propose it shouldn’t be for that reason, but never mind; we’ve made that point.

What I’m saying here is the committee actually deserves to know the level of consultation with the local government sector. It may be, actually, that there has been considerable consultation—and that’s fine. It might be, as part of that consultation, that the local government sector has said, “Yep, fair enough. You gotta recover costs. We’ve also incurred costs, as everyone has in the current moment, but sure. Take 4 percent of what we would have got to cover your costs.” If that is the case, who knows, that might actually change our mind. But it’s important that the committee knows.

Hon SIMEON BROWN (Minister of Local Government): I refer the member who’s just sat down, the Hon Kieran McAnulty, to page 10 of the cost recovery impact statement.

TOM RUTHERFORD (National—Bay of Plenty): I move, That debate on this question now close.

CHAIRPERSON (Maureen Pugh): I’m not quite sure we’ve exhausted all of the questions on this particular clause.

INGRID LEARY (Labour—Taieri): Thank you, Madam Chair. I want to just pick up on something that the Minister himself brought into the debate around good public policy and cost recovery, and to question him about the evidence base. But, before I do that, this is a genuine point that I raise and a question to the Minister, and I bring this point because I note that, in a previous committee of the whole House stage in the Chamber today when a Minister in the chair was texting or was on the phone, the presiding officer felt that that wasn’t really engaging in the debate.

So I’m very grateful that the Minister has answered the subsequent questions. We haven’t heard answers on the original one. So I do have a question to the Minister. It’s not my primary question; it’s a little bit of a supp, but I would like to know if the Minister will continue to debate with us without going on to his phone so that we know he is engaging, because I think it’s really important. If we’re spending the money that my colleague from Dunedin in the Green Party—Francisco—has said is being spent, it’s really important that all sides of the House are engaged, including particularly the Minister in the chair.

My real question is around his statement that good policy making requires the costs to be recovered and that’s what he’s doing. There just doesn’t seem to be an evidence base. So I’m wondering what is the evidence base that is leading to this title of “Fines Collection Costs [Recovery]” of the policy before us. When I look at the cost recovery impact statement, it actually says that other options were “not proceeded with due to significant uncertainty around whether actual benefits would outweigh the loss of fees revenue. To progress this option extensive consultation and data collection would be required to determine whether it would be worth progressing and, if so, additional policy work would … be required.”

Now, my point is that it feels like we’ve got this the wrong way around. Surely, if this was something that the Government wanted to do, the first thing to do in a policy process is to collect the data in order to be able to get a baseline to be able to understand where the deficit is. This goes very much to the heart, I think, of what Dr Duncan Webb was asking. He was saying, “What are the numbers?” I’m saying, well, isn’t this in the wrong order? There has been a decision made, we can’t see an evidence base, and we have a cost recovery impact statement that actually says the information is not there.

So my question to the Minister is: how can this be good public policy—which is what he said and what he brought into the debate—and how can he say that there is an evidence base? Because what is disturbing to me is that viewers hear these words being thrown around a little about good lawmaking or good public policy, and they’re accepted on face value. But it’s our job, particularly in urgency and when there is no select committee process, to interrogate what the basis of the decision making is. I’m no closer to understanding the basis of that decision, because I haven’t heard from the Minister what the evidence is. He certainly hasn’t illuminated the numbers in the questions of Duncan Webb. I want to know, given that it’s actually in black and white here on the statement that there is no evidence, how could he make an evidence-informed decision, and, therefore, how can he say this is good public policy?

Now, there may be an element that I haven’t seen. Maybe there was some kind of statement made by officials at some point. Maybe there were some text messages between Ministers from different coalition parties. Was that the evidence base? I don’t know. Was it a conversation? Was it a coalition agreement? Because sometimes, in this House, we’ve been told that the evidence base is a coalition agreement. Certainly, I’ve heard in relation to, perhaps, say, Gumboot Friday, that the evidence base for that decision was a coalition agreement, and that seems to have been accepted. So if it’s a coalition agreement, I’d like to hear it, but I would then also like the Minister to say, if that’s the case, how does that make it good public policy? So there’s a logical framework here. There’s a logical train of thought. At each point in that logic, there seems to be missing elements.

I think, if we can get to that point, we may ultimately be able to find the answer to Dr Duncan Webb’s question, which is around what the actual numbers are. Without the evidence base underneath, I just don’t understand how we can do that. So if the Minister can clarify that and put those more sinister thoughts to bed, because, you know, I don’t know if it was based on text messaging or whatever, but I’d like to understand the public policy basis.

Dr TRACEY McLELLAN (Labour): Thank you, Madam Chair. I think that that was a really good question that’s just been raised for the Minister to consider. Hopefully, whilst he’s looking through some information or taking some advice and we hear an answer about that—particularly about the evidence base and what constitutes good evidence—I would like to ask a question along the same sort of vein, I suppose.

If we go back to the title itself and think about “Fines Collection Costs”, it’s implicit within that that there are cost pressures. So I’ve got two questions. If we accept that it’s implicit that, therefore, there are cost pressures, given that there’s a need to address fine collection costs, as my colleague Ingrid Leary has just said, we still don’t know what the evidence of that is. In fact, in the—what’s it called?—the cost recovery impact statement (CRIS), it specifically says that that information is absent. You know, it doesn’t exist. So we don’t know what the basis of that is. So I really do think it’s going to be difficult for us to move on from this clause, which is important. It serves the purpose of being able to—as the Minister said, it should be about what’s written on the tin. So it’s incumbent upon us here, as members of this House, to be able to do what we can do to make sure that that turns out that way.

So when we think about that, the second part of that—and I don’t think we’ve really got to the bottom of this part either. So I’d also like to acknowledge, whilst we’re waiting for this answer, that I agree with the question that Ingrid Leary has posed and the Hon Kieran McAnulty has also suggested. Why is the “Budget Measures” part still there? On the one hand—we’re hearing all this contradictory information. I think that’s why it’s making it so sketchy. We’re hearing that this has got nothing to do with the Government having to make its tax cuts add up or having to fill in gaps in its budgetary hole, so to speak. But, on the other hand, it’s explicit in the title. So, on one hand, we’ve got this implicit implication that it’s to do with cost pressures that we don’t know anything about, but, on the other hand, it’s explicitly stated in the title.

I think, before we can move on, we really do need to get to the bottom of what that is, because when we look at the cost recovery impact statement, on page 1, just past the executive summary, it literally says, under “Constraints - Time and Budget Sensitivity”, “To support the Government’s Budget priority of finding $1.5 billion”. That is the purpose. Which one is it? We’re getting told one thing by the Minister in the Chamber tonight, because he’s trying to minimise its association with the Budget or, you know, the impetus for the need to find some money to prop up the Budget, but, on the other hand, all the way through the information, including in the title, we’re told otherwise. So I think that the Minister really needs to explain that before we can move on, and I’m sure other people have other questions along those lines as well.

CHAIRPERSON (Maureen Pugh): I’ll just let the members know that that’s the third time we’ve had a speech about costs and cost recovery. Just warning the members that we are looking for new material.

SCOTT WILLIS (Green): Thank you, Madam Chair. I appreciate this is the first time I’ve been able to take a call on this Amendment Paper. I really appreciate the opportunity because it has got a really interesting title, the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill. That’s a bit of a mouthful. We do understand that in the House there has to be a title for a piece of legislation. What I’ve been thinking about, having had a look through this bill, coming to it a little bit late because we’re trying to rush this through urgency, as is usual with the crappy—excuse me, the poor legislation that we’ve become accustomed to.

We have here something that we are used to from this Government, which is a piece of nonsense. But let’s think about the title. There’s some really interesting amendments I see that we’ll get to later. I see that the Hon Duncan Webb has proposed that the title be changed. Replace clause 1 with “This Act is the Public Finance (Increase in Charges for Local Body Debt Collection) Amendment Act.” Now, that seems like a very sensible amendment, and I hope the Minister will consider that. But I think we’ve got options as well. I mean, there are more possibilities for a title that accurately represents this less than quality piece of legislation.

I note that Tracey McLellan in committee has also proposed an amendment. This amendment suggests replacing clause 1 with “This Act is the Public Finance (Making Money off Debt Collection) Amendment Act.” which, again, seems much more appropriate to what this bill is actually proposing to do. I personally have come up with another title, I think, that could be helpful.

I think I’d like us to consider the importance of the title, actually, because we do need to make sure that a title represents what is in the Act, what is in the amendment, because it has to mean something to ordinary people. So the title that I think—I think we should replace clause 1 with “This Act is the Public Finance (Further Impoverish Local Government) Amendment Act 2024”. I think that would be really helpful because we know what local government’s gone through. We know that killing three waters has put an incredible burden on ratepayers. We know that local government is not going to be bailed out by this Government.

But perhaps if we’re considering the title, why should we get to choose the title. I’m also really interested, and I’d like the Minister to tell us what type of discussion he’s had with local government about the title for this bill, which will take away money from local government. What discussions has he had and what suggestions has local government given for an accurate title for this bill? Because I think what we’d see would be something much more interesting than we’ve been able to come up with, and certainly with the title that the Minister has given us for a bill that is actually a piece of nonsense. It is, unfortunately, the work that we expect from this Government. But let us at least have an accurate title for this bill that tells us what it is. This is taking money away from local government. It is simply to fund tax cuts, and tax cuts for landlords. It’s not about ensuring a fairer system for anyone. Thank you.

Hon SIMEON BROWN (Minister of Local Government): Thank you, Madam Chair, and thank you members for your questions. The earlier question around cost recovery, page 3 of the cost recovery impact statement outlines how the expenditure in the appropriation for collection and enforcement of fines and civil debt services has increased from $43 million in 1998-99 to $58.3 million in 2022-23. During that same period of time, there has been no increase in the filing fee. There has been a small increase in the enforcement fee. The percentage of fines retained by the Crown has remained unchanged since it was in 1989. During that time, there’s been this thing called “inflation”, and particularly in the last three years there’s been a lot of inflation. So, ultimately, the point of cost recovery is to ensure that the public services that are delivering this service are able to raise the funds to be able to pay for it. That is what this bill is doing.

I just want to answer the question from the member who just sat down, which was the question of has the Government consulted on the title of the bill. It is not normal Government practice to consult on titles of bills.

JAMES MEAGER (National—Rangitata): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

The result corrected after originally being announced as Ayes 68, Noes 47.

CHAIRPERSON (Barbara Kuriger): Dr Tracey McLellan’s tabled amendment to clause 1 to replace “(Collection Costs—Budget Measures)” with “(Making Money on Debt Collection)” is out of order as not being an objective description of the bill.

The question is that the Hon Dr Duncan Webb’s tabled amendment to clause 1 to replace “(Collection Costs—Budget Measures)” with “(Increase of Charges for Local Body Debt Collection)” be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendment not agreed to.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Clause 1 agreed to.

Clause 2 Commencement

CHAIRPERSON (Barbara Kuriger): Members, we now come to clause 2. This is the debate on clause 2, “Commencement”. The question is that clause 2 stand part.

Hon SIMEON BROWN (Minister of Local Government): Thank you for the opportunity to talk about the commencement clause. The commencement clause says: “This Act comes into force on 1 July 2024.”; that is, the start of the next financial year. That is the reason why that is the start of this Act.

Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Madam Chair. You’ll see, I’m sure, that I do have a tabled amendment here, because it does seem to be a little precipitous to rush this through. I was reading the document that the Minister in the chair, Simeon Brown, referred to, the cost recovery impact statement, and just noticing that some of the constraints—this is right on the front page; it talks about constraints. For example, it mentions about halfway down the page there that Consumers Price Index data has been used as a proxy for the limited financial information, which provides a reasonable basis for decision making. That’s the problem, limited financial information, because it’s been done in a rush—

CHAIRPERSON (Barbara Kuriger): Link this to commencement, please.

Hon Dr DUNCAN WEBB: Yeah, no, this is the point, right?

CHAIRPERSON (Barbara Kuriger): Just link it to commencement.

Hon Dr DUNCAN WEBB: Absolutely, but my point is this has been done in a rush, and we need to just take a breath. So let’s just not rush into putting this into force. Of course, the fact of the matter is that we’ve rushed from one thing; we’re rushing into the next. All of a sudden, this change is going to come into force within one month, and that’s an extremely short period of time—a short period of time for systems to change but also a short period of time for local bodies, so that local bodies can make choices.

The cost recovery impact statement itself says that, on some occasions, local bodies choose different providers, and they may well, when they look at this and they say, “Oh, our costs are going up by 4 percent.”, they may want to change providers. Now, to do that within one month simply isn’t enough, because this is a lot of admin to do. You’ve got a lot of parking fines out there, a lot of enforcement notices; you might even have court cases in train, so you’ll have issued summons to people to appear, and the price that you have to pay to the Government has gone up and you’ve got no way out.

CHAIRPERSON (Barbara Kuriger): Please use the word “council” instead of the word “you”.

Hon Dr DUNCAN WEBB: Can I apologise, Madam Chair.

CHAIRPERSON (Barbara Kuriger): Thank you, Dr Duncan Webb.

Hon Dr DUNCAN WEBB: Sometimes, I do get excited about matters of such high importance—

CHAIRPERSON (Barbara Kuriger): Like commencement.

Hon Dr DUNCAN WEBB: —and the commencement date is what we’re talking about. My point is simply that councils ought to be entitled to make their own arrangements, and that ability has, effectively, been taken away from them.

My tabled amendment is very modest, actually. It was not some silly amendment that says, “push it out to the never-never.” It simply says let’s push it down the road to 1 January 2025, because what would happen then is all of the court proceedings which are currently in the system will be cleared out—because they don’t take too long, these traffic infringements and the like, usually—and the councils can then make a choice as to whether they want to continue using this enforcement mechanism or whether they want to go down a different road which might be more effective for them.

So it’s a very simple point, but the overall global point is this is just another bit of the rushed flavour of this legislation, because the Government wants to push it through and wants this money as quickly as possible. I’m saying, well, no, let’s just have a bit of reasonableness, a bit of fairness, a bit of justice and just stretch it out by six months, and one will be able to get one’s money in due course. I honestly can’t see what the rush is.

There’s a relationship thing going on here, right? The councils are going to have this thrust upon them. They probably didn’t hear—well, we didn’t hear about it until today; they didn’t hear about it, by all reports, until today. So it only seems reasonable, decent, and fair to give them an easing-in period which is a lot more than four weeks or a month.

It’s a very reasonable suggestion, and I actually would like to hear from the Minister why he has this commencement, which, whilst it’s not tomorrow—that would probably be impossible—is so quick. Is he confident that the relevant systems can be put in place to make this system work and for councils to make the appropriate decisions as to whether they opt in or choose to opt out of this, or whether this was simply plucked out of the air—either out of his own head, or did he receive advice on this date? Thank you.

Hon SIMEON BROWN (Minister of Local Government): I thank the member for the question. I didn’t pluck it out of my own head, because I’m doing this on behalf of my colleague the Hon Paul Goldsmith, of course, but I would just make the point, in terms of the time frame: no, we don’t agree with the member’s amendment to delay the date for another six months.

This is a Government of action, and we’re making decisions and we’re implementing a change. Ultimately, as we’ll get to when we get to the debate on the Schedule, the member, if he hasn’t read that part of the bill yet, will realise that the percentage increase only applies to fines which are issued after 1 July, and so all of those fines that he was incredibly concerned about which may already be in the system, the percentage continues over under the current law for those ones.

The percentage of revenue, ultimately, is collected progressively over time as those fines post that date are fined and then the decisions are made. So, actually, we think there’s plenty of time for this change to be bedded in, due to the progressive way in which this legislation—in which I think the decisions made by my colleague the Hon Paul Goldsmith were very sound, very evidence-based, and very good for supporting that cost recovery model.

CHAIRPERSON (Barbara Kuriger): Before I take the next call, I’m going to say this is a very, very narrow clause, and the purpose of committee stage is questions for the Minister. We’ve just had a full one around whether things would be in place on time, and we’ve heard the answer to that, so these questions must be apart from that and very clearly crafted to the Minister, because that’s the purpose.

CELIA WADE-BROWN (Green): Thank you, Madam Chair. I would like to ask the Minister whether he considers that increasing the costs to council after they have done all the work on consultation on the long-term plans and annual plans, when they’ve been looking at their budgets, they’re trying to keep rates down, they’re working very hard in their costs, and—bingo!—on 1 July, they start having an increase—

CHAIRPERSON (Barbara Kuriger): I’m not hearing about commencement; I’m hearing about cost at the moment. Has the member got a question about the commencement date?

CELIA WADE-BROWN: Yes, the commencement date of 1 July 2024 is in the coming long-term plan or annual plan period that councils have already consulted on. And, actually, my colleague Duncan Webb’s amendment doesn’t go far enough. It’s a minor improvement but it should be from 1 July 2025, because otherwise there’s no opportunity for councils to make more precise their budget, as I think they are being asked to.

So, again, I see you embodying the spirit of Minister Goldsmith, but in your role as Minister of Local Government, I assume you can give us some answers as to why you think you can impose this when the long-term plans are all but agreed.

CHAIRPERSON (Barbara Kuriger): I want to make it very clear that the Minister is here in his role—I was going to say replacing or substituting Minister Goldsmith; so it’s not about the Minister’s other portfolios, unless he wishes to expand on that, but he doesn’t need to.

Hon SIMEON BROWN (Minister of Local Government): No one, Madam Chair, can replace the Hon Paul Goldsmith, but what I would say is in terms of the member’s question, in terms of 1 July 2025 versus 1 July 2024, as outlined in the cost recovery impact statement, the anticipated revenue from increasing the percentage in the next financial year is only $285,000, and, of course, that will be spread across, you know, all of the different organisations—councils, entities which are applicable for that particular percentage. So the Government considers that to be very minor.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Madam Chair, for my first opportunity to ask a question of the Minister. I have a new line of questions for the Minister about the commencement date, which relates to some information that this Parliament has learnt today about payment providers.

Now members who have been following along closely with the post-Budget debates will know that three months is the time required for most payment providers, both on a private provider basis and when acting for the Government, to implement changes into their system. That was widely canvassed and is now on public record from the Hon Simon Watts. We also know from that Minister that he was able to consult with the payment providers for one month before today’s date—about one month—because that is the time period that he presented to the House as a three-month period which was required for consultation. But there are only two months before this legislation was introduced into this House and the date on which it would commence. So we can assume that there was a month there for the Minister to consult.

My questions to the Minister are: which payment providers are providing the parking fines for councils and which ones for the courts? Are they the same ones that deliver those services, like payments to employees, that would need to take into account changes to the income tax rates? About the providers, have those providers been consulted with for about the same period—for about one month prior to the introduction of this bill? Is that sort of the standard for this suite of bills which are about Budget measures? My last question before I move on is: do the payment providers need to take into account different measures on the fines side to those that are on the courts side, given that the courts side are regulated in a different way and are a collection of a different kind of public levy?

Hon SIMEON BROWN (Minister of Local Government): The fees are, and the percentage is ultimately collected by the Ministry of Justice—and they will simply adjust how much they charge and how much they retain based on what the law and the regulations allow.

INGRID LEARY (Labour—Taieri): Look, I’d like to start my contribution just by saying that I know this is a very short clause and it’s to do with the date, but the issues raised by the Hon Dr Duncan Webb are real issues when it comes to the timing. The question I have is—and I’ll say it now and then I’ll give some context to it—did the Minister consider last week, when it came out in the media about the situation with parking fines in Invercargill, moving the date to ensure that there was enough risk and liability consideration to what would happen if the Invercargill situation happened?

Now, what happened in Invercargill—and the reason I’m interested in this is because I am the Labour buddy MP—is that that council is in the position of having to refund $500,000 worth of parking fines. It is something that the council can’t really afford to do. It’s got a small ratepayer base. It’s got a population of around 60,000 people.

CHAIRPERSON (Barbara Kuriger): Does this have something to do with commencement of the bill?

INGRID LEARY: Yes, it certainly does. It certainly does, Madam Chair, because—

CHAIRPERSON (Barbara Kuriger): Can you explain to us quickly how it relates to commencement?

INGRID LEARY: Absolutely. Thank you for indulging me, Madam Chair. So my question is: given what happened in Invercargill and given the very, very short commencement date, and given the questions that come up from the Invercargill situation about who bears the liability of the lost revenue from those fines, did the Minister consider moving the date to seek further advice about what would happen in a situation like this?

Now, this is not hypothetical; this happened. The situation was that parking fines between 1 July 2022 and 29 February 2022—it’s been revealed that they were incorrectly issued under a council by-law. The fines were for $40, and then $490,880 and 12,272 parking fines were issued. This is what I believe, if the Minister was prudent, and this came up in the media, which it did last week—did he say, “OK, have we given enough time to consider what would happen in that situation?” Because the council has decided to return that money to people who got those parking fines.

Now, the council may, in turn, I guess, try to seek recovery of those fines from the Crown. I don’t know if it’s going to do that, but if I was a Crown Minister, I would be asking myself: what risk management strategy do we need in place to make sure we’re protected from that? I don’t see anything in the commencement date or in the regulatory impact statement or in any of the other documentation that would suggest that there has been some attention brought to the question about liability.

I raise this in the context that $500,000 is a lot of money for a small council, and so they may seek just—I don’t know how they would do it, whether they would just ask the Minister, in the spirit of cooperation. Given that the Crown has recovered a certain amount of that money through this type of legislation, through the Public Finance Act, they may say, “Can you please give us back the amount that we have paid to you?”, or they might try and wear it.

So the question is very much about commencement, because everything might have looked in order, although I doubt it with the speed at which we’re going through this—but when something like that comes up and it exposes the Crown, through the exposure of the local council, I do think it’s prudent for the Minister to turn his attention to whether the date is simply too quick. And maybe, like Dr Duncan Webb saying to leave it for—I’m not sure how long he said; I won’t ask him, but perhaps a month, to seek some further advice and say, “What would happen in the case of an Invercargill-type situation?”

My final comments are that it’s really unfortunate because with the end of free public transport in Invercargill, the young people from the south cannot catch buses to the north to get to their sports games—

CHAIRPERSON (Barbara Kuriger): Now we’re a long way away from the commencement.

INGRID LEARY: Yes. I just wanted to make that point because $500,000 is a lot of money and a lot of exposure, and so I’d love the Minister to answer my question, please.

MILES ANDERSON (National—Waitaki): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

CHAIRPERSON (Barbara Kuriger): The question is that the Hon Dr Duncan Webb’s tabled amendment to clause 2 to replace “1 July 2024” with “1 July 2025” be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendment not agreed to.

A party vote was called for on the question, That clause 2 stand part.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Clause 2 agreed to.

CHAIRPERSON (Barbara Kuriger): Members, the vote on the closure to clause 1 was incorrectly recorded as Ayes 68, Noes 47. The result of the vote was actually Ayes 68, Noes 49. The record will be corrected accordingly.

Clause 3 Principal Act

CHAIRPERSON (Barbara Kuriger): Members, we now come to clause 3 and this is the debate on clause 3, “Principal Act”. The question is that clause 3 stand part.

CHLÖE SWARBRICK (Co-Leader—Green): Thank you very much for the opportunity to ask the Minister a number of questions about this Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill.

The questions that I would ask the Minister—and I am hoping here for a bit of a back and forth—are whether he considered in the introduction of this legislation, and, in fact, in the consideration leading up to the introduction of this legislation, the fact that—the last time that I checked—back in 2016, the average amount of spending that occurred at a local government level in the OECD was approximately 11 percent per the local and central government proportions—sorry, the average was 30 percent in the OECD. But here in Aotearoa New Zealand, we have less than half of that, at approximately 11 percent. This is something that I’ve heard the Minister talk about quite a lot—the fact that we need to see more resourcing for local government in this country to be able to meet the challenges of the crises that it is facing and the infrastructural deficit.

So when it comes to the fact that this bill will increase the proportion that central government can take back from local government, when it comes to the collection of these fines, I want to know whether the Minister had any consideration for the fact that local government is currently starved of resourcing and funding and whether he looked at any other potential avenues to support them with revenue generation.

Those are questions for the Minister, and I would hope that we can open up a bit of a back and forth here.

CHAIRPERSON (Barbara Kuriger): Could we please hold that question to clause 4, because the “Principal Act” is, basically, all around increasing the percentage the Crown retains from the amount of fines recovered. When we get into clause 4, we talk about the local authorities there, so if we could just hold that question.

TOM RUTHERFORD (National—Bay of Plenty): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

A party vote was called for on the question, That clause 3 be agreed to.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Clause 3 agreed to.

Clause 4 Section 73 amended (Payment of fines to local authorities and other organisations that conduct prosecutions)

: Members, we now come to clause 4. This is the debate on clause 4, “Section 73 amended (Payment of fines to local authorities and other organisations that conduct prosecutions)”. The question is that clause 4 stand part. ChlCHAIRPERSON (Barbara Kuriger)öe Swarbrick.

CHLÖE SWARBRICK (Co-Leader—Green): Thank you, Madam Chair—

CHAIRPERSON (Barbara Kuriger): Oh, sorry—can I just let the Minister go first?

CHLÖE SWARBRICK: Absolutely.

CHAIRPERSON (Barbara Kuriger): Thank you.

Hon SIMEON BROWN (Minister of Local Government): Thank you, Madam Chair. Look, this is a very narrow clause. It simply replaces “10%” with “14%” in relation to the payment of fines to local authorities, in relation to how much the Crown retains from those fines to, effectively, cover the costs of running the administration of it.

The Government chose that figure of 14 percent based on advice to align this with, basically, the fees charged by private debt collectors when collecting infringement fees for local authorities in order to ensure that they were recovering their costs appropriately. The ministry’s advice to increase the proportion of fines retained to 14 percent was based on its understanding of the nature of fees charged by private providers, but it was also taking into account that the proportion of the fine retained by the ministry is a contribution towards the costs of collection, whilst private debt collectors are profit-driven.

In that instance there, the alternative for councils would be to use an external, private debt collector, and, of course, they would—based on this advice—charge a higher percentage because, of course, they would also be taking a percentage of that as profit. So 14 percent is looking at what the underlying costs are, which is, ultimately, why we’re making that change—to ensure that it’s a cost recovery model.

: Third time lucky—ChlCHAIRPERSON (Barbara Kuriger)öe Swarbrick.

CHLÖE SWARBRICK (Co-Leader—Green): Thank you very much, Madam Chair. So, as I was alluding to—unfortunately, in the wrong clause, as you so dutifully pointed out—what we are talking about here is a context and a backdrop whereby we have had, over the past 15 or so years, a successive number of inquiries commissioned by successive Governments which have told us that local government is massively underfunded and under-resourced to do the work that it does. Now, this is particularly pertinent here because what we’re looking at with this clause is, as the Minister himself has just said, that increase from 10 to 14 percent in terms of what the Crown can recover.

So my questions for the Minister are particularly related to any consideration that he, as Minister for Local Government, or indeed Minister for Auckland, may have given to that broader context of the resourcing which is available to local government in this country, given that he is looking to take more of that funding through this increase in the proportion of cost recovery to the Crown. Just to run through some of those reports, for those who are following along at home and may like to have those citations, we’re talking here about the likes of the Shand inquiry, we’re talking about the Productivity Commission review of the Shand inquiry—which, actually, New Zealand First asked us to do back in the 2017 to 2020 term; I’m dedicating this to the Hon Mark Patterson—and then, of course, we had, most recently, I believe tabled at the end of last year, the Future for Local Government Review.

All of these reviews and inquiries have told us precisely the same thing: local government is not resourced to do what it needs to do to meet the challenges of our time, let alone the increased responsibilities and mandate that are placed on it by successive amendments to the Local Government Act 2002. It does not have the ability to generate the revenue necessary to meet those challenges and those tasks. As, actually, former Mayor of Wellington Celia Wade-Brown was just alluding to, the fact that we have had—and consistently are seeing through the rate-setting processes with the long-term plans having gone out to consultation with communities over the last few months—councils under immense pressure when it comes to setting their rates. I know that the Minister has had a lot of engagement with this in Auckland when it comes to his water plans.

So my specific question to the Minister is: what consideration, if any, in the development of this legislation—and particularly in this clause when it comes to the Crown’s ability to recover the cost—did he have for the ability for local government to generate alternative revenue streams? And that unfairness in the context of the OECD, will we see far higher proportions allocated to the use of local government in relation to central government?

INGRID LEARY (Labour—Taieri): Thank you, Madam Chair. My question is about the 10 and 14 percent—the relationship of that. My question to the Minister, which has been asked but not answered, is about whether the costing is about individual fines or the quantum; the volume of fines, and how that relates to the so-called cost recovery. Because if we look at the volume of fines, actually there’s been a bigger volume and, therefore, the cost recovery would have got smaller—in fact, to the point, probably, the evidence would show that there would be a negative cost recovery element required. So we haven’t had that specific question answered.

On the back of that, I would like to speak to my tabled amendment, which is to say that rather than saying from “10 percent” to “14 percent” for the cost recovery, I think that a better amendment would be just to make it 0 percent. We don’t seem to have, from the discussion in the Chamber, an evidence base by which to measure the costs that need to be recovered. We haven’t had answered whether it’s by individual fine or by quantum. The most prudent thing to do in the absence of evidence, which I have asked about, is to, basically, make the effect of this bill neutral. That way, we would probably be able to pass it, we could all go home, and we wouldn’t have to stay here all weekend.

But it is contentious when we’ve got this 4 percent increase and we still haven’t got to the point of how that was achieved. If I look at the numbers, we’ve got evidence that the spend by the courts in collecting fines was $43 million and $99 million in 2023. So there’s been quite a leap there, and that’s why I’m suggesting that if we’re looking at the volume of fines, the cost recovery would seem to go on—if you thought of a graph, instead of the numbers going up and the graph going up, the graph would go down. So that is why I think my tabled amendment would help to get us out of a spot of bother. We could actually just make it sort of fiscally neutral impact, but we could still go ahead and pass the bill. So my amendment just simply says, “In clause 4, replace ‘14 percent’ with ‘0 percent’.”

Now, I’d be happy to not have that happen if I could understand from the Minister what the mathematics is underlying the suggestion of the 4 percent. We’ve heard it’s cost recovery of debt collectors, but there are no numbers around that and I’m really curious to know: what debt collectors were consulted with? What numbers did he look at? Were there a range of debt collectors across a range of councils across New Zealand?

Just a little bit more sunlight on that would help us to get a better handle on what the problem is that we’re trying to fix. In the absence of that—and I’m an optimist, so I do hope that the Minister will answer it—I’d suggest that my amendment is an easy way out of a tricky situation that would help us to progress this bill, fiscally neutral, just replace “14 percent” with “0 percent”. That way, even if there’s no evidence of whether the costs are going up or down in terms of recovery and whether actually a profit is already being made, at least we could be seen as being responsible because we have something that is not purporting to say that it’s based on evidence when, so far in this debate, we haven’t heard any evidence. So I’m really keen to get the Minister to respond to that, please.

CHAIRPERSON (Barbara Kuriger): The Hon Dr Duncan Webb. Oh, sorry—the honourable Minister.

Hon Dr Duncan Webb: Aw, you called me, Madam Chair!

CHAIRPERSON (Barbara Kuriger): You’ll get a turn.

Hon SIMEON BROWN (Minister of Local Government): Thank you, Madam Chair. I appreciate the member’s question. We will not be supporting her tabled amendment, because, of course, what that tabled amendment does is it would, effectively, mean that we would not be achieving cost recovery and, instead, we’d be having to take money from other parts of government to, effectively, fund this particular function of ensuring that people pay their fines. So whilst that member might seem that putting it down to 0 percent is a good idea, that would mean we wouldn’t be getting cost recovery, which means we’d have to be getting general taxation to pay the cost of this—which is not good policy and we are avoiding that.

CHAIRPERSON (Barbara Kuriger): The Hon Dr Duncan Webb, and it’s only second time lucky for you.

Hon Dr DUNCAN WEBB (Labour—Christchurch Central): That’s right. Don’t worry, I can have a third round later. I’d be very happy to do that.

CHAIRPERSON (Barbara Kuriger): We’ll see. Depends how relevant this contribution is.

Hon Dr DUNCAN WEBB: This is bang on, because I want to talk about the amount of this increase here. There are a couple of things that come out of it. In particular, in the statement, it talks about the impact of this particular increase on members of the public. This Government that we’ve got is very keen to look after the squeezed middle, I think they call them, and they talk a big talk about low-income New Zealanders, but the impact statement says, “Low-income individuals are likely to be disproportionately impacted by increasing costs.” You know, I hadn’t thought about this, but, of course, they’re the ones who are likely to be unable to pay on time in the first place, and so they’re the ones who are going to get whacked with these increased costs. So I want to know from the Minister whether he actually turned his mind to the question of what impact this would have on New Zealanders who are struggling to get by with costs going up, and so on, and this, in fact, is an increased cost.

The other thing is this: he’s chosen—it’s been plucked out of Minister Goldsmith’s head—this 4 percent figure. He said it’s because he uses the Consumers Price Index (CPI). It’s actually a 40 percent increase on 10 percent. He said he used CPI, but that makes no sense, because if we use the CPI every, say, five years, eventually you’ll get to 100 percent. That can’t possibly be right to take 100 percent of the fine. Look, my colleague Ingrid Leary is always the radical on this side of the House. I’m the moderate! So I proposed in my tabled amendment just a mere reduction to 5 percent to really address the fact that the most struggling New Zealanders are the ones who are going to be most heavily hit with this.

Now, I do have some other amendments, and I’ll take guidance from the Chair on where they fit, because, in fact, the other amendment I have is one which talks about giving the court a discretion, because, in many ways, it would be appropriate for the court to have some discretion, because it does in respect of many aspects of fines, and it would be appropriate for the court to have discretion in respect of whether or not this 14 percent goes left or right. So that’s an additional proposition that I have for the Minister. But my real question is this—and the reason I want to change that figure is because this impacts those who are struggling the most. It doesn’t impact people who pay their fines on time because they’ve got good life admin and plenty of money to do it. My suggestion is that what’s proposed in this bill and what’s outlined in the impact statement is, in fact, really just too tough on working New Zealanders, who are struggling to make ends meet—

Hon Simon Watts: Who you didn’t want to give a tax cut to!

Hon Dr DUNCAN WEBB: There you go—Mr Watts over there—

CHAIRPERSON (Barbara Kuriger): So that’s the statement. Can we have the question for the Minister?

Hon Dr DUNCAN WEBB: Well, the question for the Minister is twofold. I have asked it. The first question is: will he agree to my amendment to reduce that increase down to a gross 5 percent figure? And the second one is: when he set that number of a 40 percent increase, what consideration did he give to the impact on members of the public, and did he take into account the advice set out in his impact statement that says it will disproportionately impact—and I’ve got it here somewhere—low-income New Zealanders and also Māori and Pasifika? I’m sure it says that in there as well. Those, Madam Chair, are my questions.

Hon SIMEON BROWN (Minister of Local Government): I listened very carefully. I think there were two questions. The first was: will we support his tabled amendment? The answer to that one is no.

The second is in regards to the impact. Well, the point of this clause is that it is about how much the Crown retains of that particular fee, and it is not to do with the fee. Those are two separate issues. This is just the percentage retained, and, ultimately, that is very different from what the fee will actually be. So, ultimately, this actually impacts how much the local council would be getting from that fine, not what individuals would be paying. So, therefore, they are two very separate issues, and the answer, as I said to his tabled amendment, is no.

CHAIRPERSON (Barbara Kuriger): I’m just going to say, before I take another call, that we are talking about the change here proposed, from 10 percent to 14 percent, and that’s all we’re debating right now.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Madam Chair. I have a new line of questions on this change, clause 4, from 10 percent to 14 percent that will be able to be deducted by the Crown from fines imposed by councils in the prosecutions of those. They are straight questions, and I hope the Minister can give me answers to my six questions.

So the first is: on the average fine imposed by, or on behalf of, local authorities, what percentage of that amount that the Crown deducts represents real costs? I ask that because even though we’ve been presented by a cost statement along with the papers, we haven’t got any numbers in that around what the real costs actually are for the Crown.

My second question, which relates to that, is: if it is 100 percent, is the Crown at the moment subsidising the prosecution of parking fines on behalf of local government? Is it the case that taxpayers are paying for local governments to levy parking fines and then enforce them? That’s a really useful thing for the committee to understand.

My third question is: if it’s not 100 percent, then what are those real costs? Because we’re talking about the cost recovery element here, so I want to understand. These are fines imposed for offences prosecuted by, or on behalf of, local authorities and other organisations. So that’s not the prosecution of those. Prosecution of those actually sits with the local councils already. Most local councils conduct the prosecutions themselves. So is this a back-office cost that the Crown imposes on its regulation-making power to make those prosecutorial powers, or is this another cost represented somewhere as a back-office cost? I’d like to understand what those real costs are. That’s the third question.

The fourth question is: which payment providers collect fines on behalf of local providers now? In the documents presented alongside this bill, we heard that some councils have elected to use private providers already. However, the Minister, in answer to questions to me, told me that it was the Ministry of Justice only that collected these fines. There are two points that I’m getting at there. And, to assist the Minister, the Ministry of Justice uses private providers to levy its payments, but then I’m also asking: if the Ministry of Justice is not providing that service to the local councils, then who is?

My fifth question is: does the increase from 10 to 14 percent include any money awarded by a court in respect of any loss or damage? The question there is about what kind of money that’s being collected here will be subject to the 4 percent increase, given that my other questions have been about whether this is, in fact, cost recovery or whether it’s another kind of fee, levy, or penalty, as I described it in my second reading speech.

My last question to the Minister is: is an Order in Council the appropriate way for councils to have their parking fines set? This is relevant to clause 4 because it goes alongside the regulation-making powers that are done by Order in Council. And this goes to a wider set of considerations, here, that we have not yet had a chance to debate: what is the appropriate policy for parking fines? Should they be high? That disincentivises people to park their cars in a certain area, and that is a policy decision, so why is it being made by Order in Council?

My question there is: should it not be in the primary legislation? We haven’t gotten into that yet. But, on the other hand, we’ve got this power that applies in exactly the same way to the court fees. You argue the toss pretty differently if you’re applying the same sorts of values there. If fees are going up for people to have a conversation about whether they were, in fact, parked there, about whether the fine was levied in the right way or in the situation that my colleague Ingrid Leary described where there’s been some kind of administrative error, then you’re making it harder for people to engage in the system, and, ultimately, that affects those people who already have high barriers to access to justice. So we need to understand the Minister’s justification here for using Orders in Council instead of primary legislation or, at least, properly understood secondary legislation mechanisms, which the primary bill gives effect to.

CHLÖE SWARBRICK (Co-Leader—Green): Thank you very much, Madam Chair. I’d like to return to the line of questioning that I put to the Minister earlier, which, unfortunately, we’re yet to elicit a response to, and that is particularly around the considerations that may have been given to the impact on local government revenue. In fact, we have heard a lot from this Minister, including throughout the election campaign, when it comes to the money that local government has to play with to meet the challenges of our time and that infrastructural deficit.

We heard just before in responses to other questions, particularly from the Hon Dr Duncan Webb, that the Minister was saying that if we did not make this increase from 10 percent to 14 percent, then we would end up with, basically, the shortfall being paid for out of general taxation. Now, this is a really important point and a question that I want to get a response from the Minister on, because, actually, not all too recently, we had a bill in front of this House in the form of the Housing Infrastructure (GST Sharing) Bill from the ACT Party, and we had a really interesting contribution from a member, which called this “a sensible piece of pragmatism which is sorely missing in this House.” Going to the point that this was about GST or Government revenue sharing, which the Minister has just said that he is opposed to with local government. That contribution calling this “a sensible piece of pragmatism which is sorely missing in this House” was from none other than the Hon Simon Watts, now our Minister of Revenue.

To that effect, my question for the Minister is: whether those statements that he offered in response to the questioning from the Hon Dr Duncan Webb, about how he does not intend to use general taxation in order to help support local government, is to be seen as a movement away from the kind of support that we’ve seen not only from the ACT Party historically but also actually from New Zealand First, who’s campaigned on policies such as GST sharing. So my question—

CHAIRPERSON (Barbara Kuriger): We’re a bit out of scope. So I want to see the question in scope, please.

CHLÖE SWARBRICK: My question for the Minister is: did he have any meaningful consideration for other revenue-raising measures that local government may have in the consideration of this legislation?

Hon SIMEON BROWN (Minister of Local Government): Well, I just want to remind members that this is a very narrow section in this bill. It is simply about replacing 10 percent with 14 percent. As I answered that member when she asked her question earlier about the total cost impact, all of the entities which are affected, the total amount that this will cost for all entities, including local government, is $285,000 in the next financial year.

CARL BATES (National—Whanganui): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

CHAIRPERSON (Barbara Kuriger): The question is that the Hon Dr Duncan Webb’s tabled amendment to clause 4 to replace “14%” with “5%” be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendment not agreed to.

CHAIRPERSON (Barbara Kuriger): The question is that Ingrid Leary’s tabled amendment to clause 4 to replace “14%” with “0%” be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendment not agreed to.

A party vote was called for on the question, That clause 4 be agreed to.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Clause 4 agreed to.

CHAIRPERSON (Barbara Kuriger): The Hon Dr Duncan Webb’s tabled amendment to insert new clause 4A to provide compensation for victims and complainants is ruled out of order as being outside the scope of the bill.

The Hon Dr Duncan Webb’s tabled amendment to insert new clause 4A to provide discretion to the court in the percentage of fines retained is ruled out of order as being outside the scope of the bill.

Clause 5 Schedule 1 amended

CHAIRPERSON (Barbara Kuriger): Members, we come to clause 5. This is the debate on clause 5, “Schedule 1 amended”, and the Schedule. The question is that clause 5 stand part.

Hon SIMEON BROWN (Minister of Local Government): This is a Schedule which just makes it very, very, very clear that the change from 10 percent to 14 percent only applies to fines which are recovered and imposed “on or after 1 July 2024”. The 10 percent figure “continues to apply to an amount of a fine recovered—(a) on or after 1 July … (b) [but] in respect of a fine imposed before 1 July”. So, effectively, if a council is fining someone today, but, of course, it may take some time for that fine to go through the system, because that fine was based on a date before 1 July, it’ll be based at 10 percent. If that fine is issued on or after 1 July, then it will be 14 percent. So this is, effectively, a subsequent amendment to ensure that there is no retrospectivity based on the date of the fine—a very sensible and sound change. I commend it to the House.

Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you to the Minister for pointing that out, because he actually informed me of some of the mechanics there that I wasn’t fully aware of. That was very useful. So thank you. Always happy to cooperate if the Government knows what it’s doing.

But one of the questions I do have is about the tail here, because, as the Minister says, the new regime applies only to fines imposed on or after 1 July, and the old section continues to apply in respect of a fine imposed before or recovered after 1 July 2024. But I guess the question I have is this: there’s going to be a whole lot of fines out there—you know, hundreds of thousands of these things—and some of them grind their way through the courts slowly. Is he confident that there’s a system in place where you’re going to be able to silo off these ones that might be six months, 18 months old and have to be dealt with quite differently, because this is going to be, presumably, two entirely separate systems, and what’s the process for separately tagging—well, the language of the Act is the fines under the old section, and making sure they’re distinct from the fines under the new section, which is the amended section.

So it’s really a pretty simple question, because what we don’t want to see is a whole lot of confusion and the Invercargill situation cropping up, where we had to go back and get the IT experts in, unwind the whole thing, and start doing additional payments. So it’s really about that shrinking tranche of fines which were imposed prior to 1 July, but where they go to court after 1 July and are, therefore, subject to the old section—what’s the system for making sure that that all works?

Hon SIMEON BROWN (Minister of Local Government): The answer to that question is called the calendar.

SCOTT WILLIS (Green): Thank you, Madam Chair. My question is indeed related to the provisions relating to the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill 2024 Part 4, and I’m—

CHAIRPERSON (Barbara Kuriger): We’re on Part 5.

SCOTT WILLIS: Part 5. Part 4 is scheduled into it.

CHAIRPERSON (Barbara Kuriger): The member’s missed Part 4. Does the member have—is it Part 4 of the Schedule—

SCOTT WILLIS: Part 5.

CHAIRPERSON (Barbara Kuriger): Is it Part 5—Part 4 of the Schedule, is that what your—

SCOTT WILLIS: Yes.

CHAIRPERSON (Barbara Kuriger): OK. Right. I’m glad we clarified that. Keep going.

SCOTT WILLIS: My apologies, Madam Chair. Thank you. My question, really, is: has he considered the cost of administrating? So it sort of follows on from my colleague Duncan Webb’s question: has he considered the cost of administrating the 10 percent of fines and the 14 percent of fines with that differential in timing? Because we’ve heard from the Minister that this is a Government of action. But, actually, what we’re seeing is a bit of chaos here.

I’ve got several questions. I’m interested: has the Minister actually considered simply stopping the process here, allowing us to consider it more properly through a select committee process—

CHAIRPERSON (Barbara Kuriger): I think we’re—[Interruption] Stop just a moment. I’d really like this to be at the point—because it really is about fines imposed before the start of this, as opposed to fines after, and I think the Minister’s clarified that very well. So I need questions to be related to specifically that.

SCOTT WILLIS: Thank you, Madam Chair, and that is exactly my point, because I would like to know—[Interruption] If I may without the distractions, please.

CHAIRPERSON (Barbara Kuriger): Ignore the distractions; just ask the question.

SCOTT WILLIS: I would like to know what the costs are associated with those fines. Let’s see, the old section continues to apply for fines imposed before 1 July. So how are we going to manage the administration of that and what will the costs be associated with those costs that accrue a 10 percent fine, as opposed to the different 14 percent fine after that? How much has that been calculated? How has that been calculated? And is there any work under way to make sure we understand the true cost of this? Because, really, this may seem like a very inconsequential and silly piece of legislation, to be frank, but there’s a true cost associated with it and it relates to that differential in time.

So if we could have some clarity about how the Minister has been able to judge the value of this legislation and breaking it down with that old section to apply for fines imposed before 1 July, I think that would be very helpful for us to understand because, really, we’re here—we’re not in a select committee; we’re doing this through urgency. We have to get as much information out as we can in a very, very pressed environment. We really don’t want to drag this on. We want the Speaker to be able to get his 2 o’clock flight tomorrow but we also want to know what the answer is, and this is an important question. I know the members opposite are really keen to get on the road but we need to do this properly, given that we don’t have the luxury of select committee.

So, please, if the Minister could come back to giving us that breakdown of what the difference in the date is going to make for the cost of implementing this piece of legislation. There’s perhaps another question there—

Hon Members: Oh no!

SCOTT WILLIS: Oh yes—oh yes!

CHAIRPERSON (Barbara Kuriger): Make it quick and make it relevant.

SCOTT WILLIS: Well, I’m attempting to. Thank you, Madam Chair. No, the relevance is, really: did the Minister also talk to local government about that difference? That is really key here, because local government is going to need to know this as well. So there’s two questions there and I’d appreciate an answer please. Thank you.

Hon SIMEON BROWN (Minister of Local Government): There were two very simple questions in there. The first was in relation to cost recovery and I was pleased to hear the member actually ask about cost recovery. Page 9 of the cost recovery impact statement is quite useful in outlining that this will raise $285,000 in year one. So that answers the first question.

The second question, which eventually the member got to, was in relation to consultation, and page 10 actually has a section on consultation in relation to this issue.

CHAIRPERSON (Barbara Kuriger): I’m going to take another question now, from Arena Williams, but I feel like right now we’re dancing on the head of a pin, because it’s a very small piece of legislation and this needs to really home in on this Schedule.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Madam Chair. I want to ask the Minister three questions about the difference between the provisions which will apply before July and the provisions which will apply after July. The first question is about, given that there are a number of councils that will be referring parking fines into the court systems, what procedural unfairness exists between those councils that progress them quickly and those councils that progress them slowly? We might assume, because we haven’t been provided this in the documents, that smaller councils progress these matters with greater periods of time involved, because the administration between levying the fine and then progressing it to enforcement might perhaps be longer.

I’m asking about that procedural unfairness because different rates will apply at different times, but, essentially, committing exactly the same offence in one town might result in a different result for claiming an offence in another town, and I want to understand what that difference is.

The second question is: how many court sessions are in train now? Because my colleague the Hon Dr Duncan Webb has been asking questions about how the delay in timing will affect prosecutions that are on foot now. We haven’t got any information to understand the size of that problem. The Minister simply answered that the answer was the calendar, but what we’re trying to get to here is how many people are impacted by what is, essentially, a procedural unfairness here, given that there is a change of law and a change of timing for exactly the same offences being prosecuted in exactly the same way.

The third question is: have the courts taken these changes into account in their systems? And the fourth question is: has an appropriation been made for the Minister for Courts for any flow-on costs expected from this?

Hon SIMEON BROWN (Minister of Local Government): To answer the member’s question, there is no procedural unfairness because the point of this whole part is to ensure that for fines collected before that date, there is a lower amount; after that date, there’s a higher amount, and the imposition is on the council, not on the individual. Then the question there is around the cost of actually implementing it. I would just like to remind members that it is well worth reading the cost recovery impact statement which actually even states the estimated cost to implement.

GRANT McCALLUM (National—Northland): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

A party vote was called for on the question, That clause 5 be agreed to.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Clause 5 agreed to.

Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Point of order. I’m sorry if I anticipated you, but were we going to get to the tabled amendment on that schedule?

CHAIRPERSON (Barbara Kuriger): There’s a tabled amendment, still, on my sheet here. Thank you.

Schedule

CHAIRPERSON (Barbara Kuriger): We come to the Schedule now, and the Schedule has no debate. But the question is that the Hon Dr Duncan Webb’s tabled amendment to the Schedule to replace “1 July 2024” with “1 January 2025” throughout be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendment not agreed to.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Schedule agreed to.

Bill to be reported without amendment.

House resumed.

CHAIRPERSON (Barbara Kuriger): Madam Speaker—[Interruption] can we have quiet while we’re reporting, please—the committee has considered the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill and reports it without amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

ASSISTANT SPEAKER (Maureen Pugh): This bill is set down for third reading immediately.

Third Reading

Hon SIMEON BROWN (Minister of Local Government) on behalf of the Minister of Justice: I move, That the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill be now read a third time.

The purpose of this bill is in line with the coalition Government’s commitment to reduce debt, reduce Government spending, and get back to surplus. The bill will increase from 10 percent to 14 percent the amount that the Crown can retain from fines, including infringement fines such as parking fines, collected by the Ministry of Justice on behalf of local authorities and other organisations.

That increase will come into effect on 1 July 2024. The bill has been developed as part of the response to the Budget priority to deliver effective and fiscally sustainable public services—listen up, Labour!—and identify enduring savings across Government departments and agencies. The increase in the percentage the Crown can retain from fines collected by the Ministry of Justice is expected to increase net revenue by $2.697 million across 2024-25 to 2028-29. The increase in the percentage retained by the Crown from fines collected on behalf of local authorities and other organisations better reflects the increased costs of operating court services over time.

It is fair that users of courts’ collection and enforcement services, who receive most of the fines collected, pay an appropriate fee for those services. The bill is a part of a package of proposals which will increase revenue from changes to the collection of court fines and increases to fees in courts and tribunals. This bill, along with other changes, will ensure the more effective collection and enforcement of fines.

The overarching goals of the Government are to build a stronger, more productive economy, deliver more efficient, effective, and responsible public services, and get the Government’s books back in balance. This bill will support that goal. I commend the bill to the House.

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

Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Madam Speaker. It’s a tragic little day in Parliament when the Government’s getting excited about imposing a tax on parking fines. This document, the cost recovery impact statement, is really all you need to read. I mean, what it sets out is just a list of shortcomings in this policy. Throughout the debate so far, no one’s actually touched on the options in the document that have not been considered. It runs through a number of options, but it, basically, says, “We didn’t look at anything else.”—it’s as if you wanted to run a lesson on how not to do good public policy—“We didn’t want to look at anything else, because ‘This was not possible in the time available. Other alternative options could not be explored due to time constraints.’ ”

So here we’ve got a Government who talks about doing things right and efficiently and all those kinds of things, and yet they won’t take the time to make sure that the framework they’re putting in place, even for something like how we collect fines and how that’s paid for—they won’t actually just do the work, because, of course, here it is: “To progress this option”—which was removing the initial filing fee to lower the barriers for local councils—“extensive consultation and data collection would be required to determine whether it would be worth progressing”. And then it says, “We basically couldn’t be bothered doing that—couldn’t be bothered consulting.” That’s the Government we’ve got now. They’re imposing costs on local bodies, and they couldn’t be bothered consulting on whether there was a better way to go about it.

Andy Foster: There’s much bigger things.

Hon Dr DUNCAN WEBB: Yeah, well, funny you say, Mr Foster, that there’s much bigger things to do, but here we are 10 o’clock on a Friday night, and we’re debating this trivial little parking tax bill. And, of course, over there, they’ve been saying, “Oh, this is all about good stewardship and cost recovery.” But the document itself makes it very, very clear what the motivation behind this bill is: “To support the Government’s Budget priority of finding $1.5 billion per annum in savings” to fill their cavernous fiscal hole that this Budget has. [Interruption] Hey, look, on the other side, you have got the pride of place of being the largest borrowing Government in New Zealand history. You have just incurred—

DEPUTY SPEAKER: Not “you”.

Hon Dr DUNCAN WEBB: No. That Government has just got the pride of place of being the largest borrowing Government in history, which, over the next four years, has to find $9 billion in interest payments. And this is how you’re going to do it. That’s right; it’s you. The Government just borrowed billions of dollars for tax cuts for landlords, and they are filling this fiscal hole with $200,000 of cost recovery. It is absolutely ridiculous.

The other thing is that there are some pretty clear guidelines about how levies and charges should be imposed. In fact, the document there sets out quite clearly that the costs recovered should be justifiable. And the Minister in the chair couldn’t actually tell us in any coherent way what those costs were—what was the equitable proportion to be borne by the State or the council, and what was the equitable proportion to be borne elsewhere by the person who had the parking fine. So that is part of the process to actually go through and think about what is an equitable and just way to do it.

And the irony is that in the document there’s basically a checklist that’s got the principles on one side and the assessment on the other, but they bear no relationship to each other, because none of those principles of good lawmaking, good regulation, and good levying and charging exist. So they don’t even know, for example, whether it’s efficient. Is this the best way to go about recovering these costs? And then it just gives you a long paragraph about how many there are and gives you a description of how it operates. It does not say that we have thought about how we could recover costs and this is the most efficient way to do it, or it’s not the most efficient but it is the most simple and that’s the trade-off we choose. That’s the kind of analysis we need.

Of course, the one that really sticks in the craw is equity: “The charges should be administratively fair: identify the impacts of cost recovery, do not seek to recover costs from one group that could benefit a previous or future group.” This is so that it’s spread out evenly. Now, the irony is that if you have a $1,000 fine, the cost recovery will be $140. If you have a $100, the cost recovery will be $14. So the costs of recovery are going to be the same, but there is a massive cross-subsidisation in there. So a percentage figure on a radically varying amount is actually quite inequitable. That’s what this Government—and this is a Government that is spending tens and tens of millions of dollars in setting up a vanity Ministry for Regulation so that these kinds of things are done right. And then, straight out of the gate, with one hand they throw cash at David Seymour’s ministry, and at the very same moment, the other hand is doing rubbish like this which just cuts across all of the regulatory principles. We don’t need a Ministry for Regulation, the principles are all there, the answers are terrible, but the questions are the right questions, so we don’t need it at all.

And, of course, the other thing in this document which this Government should be ashamed of is the fact that it makes it clear that the burden will fall hardest on those who are struggling most. This is part of a package which is seeking to fill the Government’s coffers. And when you look at who’s paying, it’s people who don’t have the money to pay their parking fines—people who can’t find the money to pay infringement offences. They might have scrabbled around, pinned the infringement notice to the noticeboard by the kitchen or on the fridge or whatever, and then they’ve put it away because they know they either have food in the fridge or pay the parking fine. They’ve made that trade-off, they’ve chosen to feed their kids, and all of a sudden they get the notice from the court or from the local body saying “You’ve got to turn up to court. It’s now not only a $40 fine, it’s a $100 court cost, and if you choose to argue it, it’s going to be more costs on top of that.” That’s who’s going to be paying, ultimately, for these increased charges, which are part of this package.

So we’ve got a Government here that’s chosen to splash money around, particularly offensively, for landlords, and then they’re saying, “Oh, we’ve got it all from savings over here.” And, on the other hand, they’re borrowing money—billions of dollars; they’re borrowing billions of dollars. So you—

Hon Andrew Bayly: You borrowed $100 billion.

Hon Dr DUNCAN WEBB: Now, you’re not allowed to heckle from there, Mr Bayly.

DEPUTY SPEAKER: That’s true, Mr Bayly.

Hon Dr DUNCAN WEBB: The fact of the matter is that we’ve got a Government that’s failed at the first hurdle. They’ve made all kinds of promises. They’re scrabbling around for $200,000 in cost recovery, and here they are disappointing New Zealanders by breaking their election promises—serious election promises. Not the $250 tax break promise—we all knew that was a joke—but there are people out there who honestly believed that they were going to get their cancer medicines because they were promises seriously made to serious people. And that is a tragedy. That is an affront. And there are people out there who are heartbroken because this Government promised that they would be taking certain steps, that they would be funding certain medicines, and they’re not. And those people are sitting there and this is all the Government can do. A little bill—a terrible little bill—that scrabbles around, looking for a few hundred thousand dollars here and there. [Interruption]

Yeah, no, I can see why you’re hanging your heads—I would too—because you’ve made big promises and you’ve let people down, and you come up with a bill like this which actually—the very similar people, people who are in hardship and struggling, you’re bashing them down again.

DEPUTY SPEAKER: Not me, Mr Webb.

Hon Dr DUNCAN WEBB: It’s shameful. No, you’re not. Those Government members are bashing them down again and it’s shameful, it’s a terrible piece of legislation, and it’s a terrible way to pass it with this kind of urgency as well. What a waste of this House’s time.

RICARDO MENÉNDEZ MARCH (Green): Thank you, Madam Speaker. This is quite the “Inequality and War on Poor” Budget, and this legislation makes it incredibly, incredibly clear. This is shambles legislation and fiscal irresponsibility from this Government, because they’re just looking after those who are already doing it well, rather than looking after those struggling to make ends meet. They will cut costs at any expense, even if it means throwing people in poverty down a cliff who are criminalised as a result of not being able to afford fines. And for all their complaining on the other side—don’t trust me; trust the advice; trust the legislation and the pieces of paper they’ve put in front of us. They’ve written it themselves. The Government worked on this legislation, and now they’re shaking their heads and, effectively, telling the public that they’re delivering for everyone, when they’re leaving behind those doing it the toughest. This legislation was a result of a desperate attempt at finding ways to put the burden on the poor to pay for tax cuts for those doing it well.

So, throughout the debate, it’s been clear that the Minister in the chair, for all his talk about localism and his commitment to actually put in place solutions that would work for local communities, doesn’t take his own words seriously. If we look at the pieces of paper in front of us, there was no consultation with key stakeholders impacted by this legislation, and this includes local authorities, Local Government New Zealand, the judiciary—this is absolutely irresponsible and a betrayal by the Minister himself, who’s supposedly committed to localism. It reeks of desperation for a Government that talks about things like localism to put forward legislation that directly impacts local government without even bothering to consult with them, because they don’t care. They tell us that they care about localism, but they don’t care. They simply care about holding true to their promise that they hate people in poverty.

And let’s make something clear too: this is a Government that does not care about criminalising people who are struggling to make ends meet. At the end of the day, those who cannot afford to pay fines will end up being criminalised and will end up with higher costs due to the enforcement fee increases. I’ve seen this myself, as somebody who worked at the front line with people who are being criminalised as a result of unpaid fines. I’ve seen people facing benefit sanctions like the warrant to arrest sanction, which Minister Louise Upston multiple times talked about in the media. She talked about how she thought that those people who had unpaid fines, who then faced sanctions, were a threat to the public. Then she had to face the truth in the media and was embarrassed by having to admit that, actually, that wasn’t the case and that she was factually incorrect. [Interruption] And the members yelling on this side fail to connect the dots. While this may be a small bill, it’s connected to so many parts of the system. The impact of the criminalisation of people in poverty who cannot afford to pay fines is clear and has ramifications in other parts of the system.

This is a bill that will lead, I tell you, to higher warrant to arrest benefit sanctions. [Interruption] And the members on the other side would do well to turn their faces from this echo chamber back to the streets and the communities who this bill affects. But they’ve shown us, time and time again, they don’t care about the people who are out in the communities doing it the toughest. They will talk rhetoric and make no action, and clearly the pieces of paper in front of us show that this bill was produced hastily with no evidence. [Interruption] They just want to go home and not do the work. It’s their fault. It is absolutely their fault that we’re here in the House debating this piece of trash legislation, because it was them who put us in this position to begin with. We didn’t want this. If it was up to me, we would be debating a bill that would be ending poverty and tackling the climate crisis, not a bill that criminalises people in poverty—come on—and not a bill that betrays the Government’s own supposed commitment to localism. Let’s be real here.

Look, they may be complaining about what I am saying, but, ultimately, it’s all in the regulatory impact statement. Do they not believe the advice that they themselves put in front of us? Come on; let’s get real. Those members, like I said, need to turn their faces back to the street. The advice itself made it incredibly clear that it will be young people, particularly those under 45, who will face the burden of the negative impacts of this legislation. And this is a Government that—let’s be real—when they talk about the advice around fines changing behaviour, it actually doesn’t change the behaviour of people who are on our salaries and the wealthy few. It doesn’t, because the fines that people often face are a free pass for those who are doing it well. A parking fine doesn’t mean much for someone who owns multiple properties and is on a six-figure salary. It doesn’t have good enough consequences. But, for someone who’s actually on the bread line, it has a massive impact. As I’ve said before, it’s the difference between them paying their rent and putting food on the table. It doesn’t actually change behaviours in the end—

Hon Member: That’s why we gave them a tax cut.

RICARDO MENÉNDEZ MARCH: —if you’re someone who’s struggling to make ends meet. This is a Government that is, frankly—yeah, tax cuts. They spoke about tax cuts. Want to talk about tax cuts in the context of this legislation, Mr Speaker? Well, let me tell you, Mr Speaker. They talk about tax cuts, but the people who will be criminalised for not being able to pay fines also happen to be the ones benefiting the least from the tax cuts.

Let’s get real. There’s nothing in this Budget or this legislation for the disabled people on income support or for people who have been living homeless—it’s breadcrumbs. They’ve told their communities that they deserve breadcrumbs and they, effectively, deserve higher fees, higher punishments, for unpaid fines as a result of this bill, at the same time depriving local government of key resources at a time where, actually, the Government should be putting in far more resources to local government to address our infrastructure challenges of today. We should actually be supporting and passing resources.

Hon Member: Three minutes—three more minutes.

RICARDO MENÉNDEZ MARCH: They’re saying, “three minutes”. They’re complaining about the fact that we are actually holding them to account. You know, I challenge them to make a substantive contribution beyond their 12-second calls that make a mockery of this piece of legislation. But you know what? The circus is run by people who themselves admit that this whole thing is just a show; it’s a theatre for them. It’s a performance for the people on the other side. This is not about serving our communities. This is about the theatre of Parliament. It takes a lot for people to come here and claim that they’re here to serve our communities, when they clearly make a whole circus out of serious issues.

Once again, when I call this Government fiscally irresponsible and illiterate, it’s because trickle-down economics has not been shown to work. It is not based on evidence. In fact, we have decades of research and facts—and younger people such as myself grew up in times affected by the impacts of failed policies such as these ones that claim to deliver for the many but all they end up doing is increasing inequality. So this bill, while it may not have the name explicitly in and of itself around increasing inequality, it will do exactly that. I challenge the members to talk to people in poverty who, because of poverty level benefits, haven’t been able to pay their fines where they find themselves in court, potentially transient through multiple addresses, unable to present themselves to the criminal justice system.

I think Parmjeet Parmar, to my left, who is shaking her head and looking confused—but if I look at her contribution throughout multiple debates, she has constantly failed to actually speak to the heart of the bill that she speaks to. Again, this goes back to a Government that is deeply unserious, that will go to such dramatic lengths to orchestrate and fabricate tax cuts—

Hon Member: One minute.

RICARDO MENÉNDEZ MARCH: —for the wealthy few—and they’ll continue yelling at me and saying, “One minute” and “I hear the bell”, but the truth is they’ve landed us in this fiscal mess. At the end of the day, the cuts to public services and the inability to address poverty will have costs beyond what they can imagine in the long term, costs in our healthcare system, costs in our public housing system and emergency housing and, then, people getting more into debt just to make ends meet. Their short-term thinking will land us into long-term problems. This is a Government that has its head in the sand and refuses to see the truth, which is actually in front of us. This is a bill that will punish the poor. All it requires is the members to read their own advice they’ve received to see the truth. The Green Party will continue opposing this and fighting for a system that works for all of us, not this Government’s wealthy mates.

Dr PARMJEET PARMAR (ACT): Thank you, Mr Speaker. I’m taking this call on behalf of ACT to support the third reading of the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill.

That was a very interesting contribution from the Green member Ricardo Menéndez March, and he did say that, yes, I looked confused and I was shaking my head. Definitely I was doing that, because I couldn’t see which bill the member was speaking to. The bill that is in front of us doesn’t bring any new sanctions; it just increases the percentage of the amount that is retained by the Crown for the fines that are collected by the Ministry of Justice. So that’s why I was confused and I was shaking my head. I wish he had spent some time reading the bill.

Very quickly to respond to the Labour member the Hon Dr Duncan Webb. Dr Duncan Webb said that this bill is a waste of the House’s time. No, I wish he had read the bill and understood the bill as well. It’s a very sensible bill, and that is why the ACT Party is supporting this bill. I challenge those members to go out and buy that item they bought in 1989, now, at the same price. This 10 percent that is retained by the Crown has not been reviewed or changed since 1989, and that’s why it’s a sensible bill, and that’s why the ACT Party is supporting this bill. Thank you, Mr Speaker.

ASSISTANT SPEAKER (Teanau Tuiono): I just wanted to remind the House of Speaker’s ruling 65/3, which tells us to not do the countdown when we’re looking at the clock. Do it inside your mind, if you must, but not aloud.

TANYA UNKOVICH (NZ First): Thank you, Mr Speaker. Sometimes less is more, and, on behalf of New Zealand First, I am going to commend this bill to the House because it’s a really good bill. That’s all I’d like to say.

ASSISTANT SPEAKER (Teanau Tuiono): The next call is a split call, and I think it’s split between Labour and the Greens.

Dr TRACEY McLELLAN (Labour): Thank you, Mr Speaker. I’ve just got a lolly in my mouth, so I’m just going to try and finish that up seamlessly so no one notices, and everything will be good.

ASSISTANT SPEAKER (Teanau Tuiono): I don’t know if there’s a Speaker’s ruling on that.

Dr TRACEY McLELLAN: Ha, ha! Well, I mean, this is the third time I’ve got the opportunity to speak on the Public Finance (Fines Collection Costs—

Hon Rachel Brooking: In just one evening.

Dr TRACEY McLELLAN: —Budget Measures) Amendment Bill in just one evening, as my colleague Rachel Brooking points out. That’s because, obviously, we’re in urgency and it always makes the bills feel a bit funny when there’s not that break in between to just let things settle, to think about things, to think about the information—sometimes new information, sometimes explanations from the Minister; all those things that might help create a better picture.

But we’re not afforded the opportunity to do that tonight, because we are here in urgency. In fact, this is the second bill that the Government has chosen to put up as part of the suite of bills that it will be taking through the urgency process, which we can see now is obviously, clearly, going to take several days. It’s the second bill that they’ve chosen to put up as part of the suite of bills that need to be passed in urgency as part of the Budget 2024. And what a wee ripper it is, isn’t it? The crown jewel in the Government’s suite of policies that they’re introducing.

I can understand that it’s been a little bit vocal from the other side of the House tonight, as the Government backbenchers have got quite animated about this bill. Sometimes, opposite things happen and the less substantive something is the more you sort of overcompensate, so there has been an awful lot—awful lot—of overcompensation tonight. But this bill, specifically, is a means by which to collect money to make the Budget add up. We know that for two different reasons. We know that because—

Carl Bates: At least you’re acknowledging it adds up.

Dr TRACEY McLELLAN: —it says “Budget”—I said to try and add it up—

Carl Bates: No, you didn’t; you said, “so that it adds up”.

Dr TRACEY McLELLAN: Make a contribution—make a contribution. He’s animated. Oh, Mr Bates, Mr Bates, Mr Bates—it’s like you’re just gagging to be in the Hansard.

We know that that’s what it’s for, because it occurs on two occasions—firstly, in the title it literally says “Budget Measures”, and when you look at the cost recovery impact statement, as has been mentioned several times tonight, to support the Government’s priority of finding $1.5 billion. And yet, on the other hand, here we are rushing through a process of urgency. We’ve heard things tonight about the commencement date—1 July—kind of thrust upon councils with almost certainly not the requisite amount of time needed to lead in to make sure that this is seamless.

We’ve talked tonight about the difference between good public policy and bad public policy and the fact that the Minister claimed that this was an example of good public policy, despite the fact that (a) there’s almost no evidence that this needs to be done in the first place—i.e., other costs not being met at the moment—and that (b) we keep hearing the same argument about some sort of inflationary effect with a proportion, a percentage of an amount, of course, which adjusts.

So I think, finally, as has been mentioned on several occasions, we do need to consider this bill, and we’re allowed to, because it says so in the title that it’s about Budget measures. So we are allowed to, and it’s incumbent upon us to consider it within the context of the Budget. As I said, the title affords us the opportunity to do that. And when I think about the context of the Budget, this is another means by which the Government has desperately been trying to find money to account for reckless tax cuts, and they’ve found money in various places. This is certainly not a headline Act. This is a small amount of money in comparison—certainly a small amount of money in comparison—to the $3.3 billion worth of money that was hauled out of climate funding, and certainly a small amount of money compared to the 13 new cancer drugs that were promised as part of this Budget and were not delivered on.

The Government were really, really specific about that, and I think it does bear mentioning. The Government were really, really specific, when they removed the exemption for the $5 prescription charge, that they were doing that to fund these drugs, and they haven’t done that, which I think is deplorable. It’s upsetting. And yet, as several people have said tonight, we could be debating those things, we could be talking about those things, but, no, we’re not doing any of that; we are literally talking about a parking ticket tax. I do not commend this bill to the House.

CELIA WADE-BROWN (Green): On behalf of the Greens, we do not support the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill. I support my colleague the Hon Dr Duncan Webb, who spoke about the disproportionate impact on Māori and Pacific that is listed by the Ministry of Justice. But I want to focus on the lack of good faith—the lack of good faith—with local government.

No one who voted in the election—that seems a very long time ago now—expected that this cost would be rather randomly transferred from central government to local government. Nobody campaigned on that transfer, so I don’t see why there is a justification for the urgency, for the complete lack of consultation, and for the complete lack of evidence. And how much revenue? Let’s just take that little part that is coming from increasing the retained percentage: $285,000. Well, I can understand central government trying to scramble to pay for the $2.9 billion in tax cuts. This really isn’t going to get there.

This amount of money is not collected in the rural councils. Many rural councils don’t have parking enforcement at all, because they don’t have those issues. It’s going to be, fundamentally, the large urban councils that this will affect the most. And I would make a somewhat educated guess that probably about $100,000 of that will be directly to Auckland. They’ve just gone out and they’ve done their consultation on the long-term plan. I’m horrified that $100,000 in a council’s budget is landed on them from 1 July, when they have already set their budget and planning.

It isn’t the hugest quantum that councils have to deal with, but it’s symptomatic of not respecting local government’s consultation processes. It shows a disdain. Even if this had to be confidential because it’s so urgent, such an important part of the Budget—which I am sceptical about—at least somebody could have let local government know yesterday when the Budget came out. But, no, they found out for themselves this morning. I don’t think that shows due respect.

Grant McCallum: Is that it? Are you sitting down?

CELIA WADE-BROWN: Wait and see—wait and see.

Glen Bennett: Pause for effect—I love it; it’s powerful.

CELIA WADE-BROWN: I’m just not sure what the effect might be, so we’ll see! There is such limited financial information. There is no reasonable basis for decision making. Yes, it may be in the scheme of $2.9 million—billion, sorry. Actually, it’s small even compared to $2.9 million, but I don’t think that the amount is an excuse for bad process. It’s a studied arrogance rather than a partnership. There is nothing else in this whole Budget that helps local government. There is nothing for city and regional deals. There is no GST back on rates, whether it’s new developments or whether it’s actually the whole of the rates system. Where is the money in the Budget for central government to pay rates on the buildings it owns? It’s just an unfair system that could have been worked better in partnership.

Maybe we’ll look forward to the next Budget actually having some lines where that money is returned, and, instead of having one of the lowest percentages of spending for local government compared to central government in the OECD, maybe we can balance things and give back more to the local community.

The other thing that has not been mentioned here is the suggestion that councils will be 45 percent—I’m not quite sure—

ASSISTANT SPEAKER (Teanau Tuiono): The member’s time has expired.

JAMES MEAGER (National—Rangitata): Thank you, Mr Speaker. Look, we’ve heard a lot tonight from members opposite about the length of contributions on both sides of the House—especially this side of the House—so, bearing that in mind, I just want to quote the full speech of Rachel Boyack from the third reading of the Income Insurance Scheme (Enabling Development) Bill, where Rachel Boyack said—and I quote—“I commend this bill to the House.”

INGRID LEARY (Labour—Taieri): Point of order, Mr Speaker. This is the third reading, and the member’s comments should be confined to this bill. I think that the contribution was out of order.

ASSISTANT SPEAKER (Teanau Tuiono): Point taken. Please focus on the bill. You may continue.

James Meager: I finished. I finished the call.

ASSISTANT SPEAKER (Teanau Tuiono): Next call.

ARENA WILLIAMS (Labour—Manurewa): Thank you, Mr Speaker. Well, here we are, at the third reading of this bill, which is quite a use of the House’s time. In Budget urgency, we are discussing savings of about $400,000 that this bill enables. It’s a penny-pinching bill to implement a parking fine tax, and the poor old Minister of Local Government had to shepherd it through. I mean, come on!

Here we go with the Minister of Local Government, who has stood on the stump and told mayors and councils around the country that he will be on their side, that he will sort out their infrastructure woes, that he will sort out Local Water Done Well, and that he will localise policy and not have central government telling them what to do. But we’ve caught him out. We’ve caught him with his hand in their pockets, using Budget urgency and telling them, on the day, that he will change a 10 percent charge—that is genuine cost recovery of the Crown—to 14 percent, but with no justification of that actually being a cost recovery. He’s not out there telling mayors and councils that the actual costs have gone up and that the Crown needs to levy this for a good reason and that the rationale for this is that the Crown’s cost is increasing. No—no, no, no. In fact, his actual documents that he introduced alongside this bill paint this as a tax grab. So, if we’re calling it a tax grab, let’s call it the parking fine tax. Let’s see it for what it is. This is a tax on local government that is designed to remove the funding that local ratepayers put towards their locally elected councils and put it back in the Government’s coffers.

This kind of legislation is poor legislation. It’s poor legislation at the best of times, but this is a situation where we have not had a select committee stage, we have not had local councils consulted, and we do not understand the regulatory impact of this on local ratepayers. This is the very worst kind of legislation. It’s taxation with very little cause, and it’s suspiciously exactly the same amount in the forecast period as that Minister cost with a muck-up at select committee. He has cost his finance Minister $1.5 million in the forecast period, and he’s gone away and penny-pinched that out of his other budgets, his Minister of Local Government budgets, which he is responsible for, and he did not take the opportunity to challenge any of that in the committee of the whole House. I put those questions to him twice, and he has not told this House that that is wrong, so we can only assume that this is a very clear message to the mayors and the councils of New Zealand that this Minister will do anything to move money around the budgets which he is responsible for. He will take from mayors, he will take from councils, he will take from local boards, and he will take from parks, from playgrounds, from libraries. He will take from the services that people rely on in their local communities to pay for a muck-up in the Transport and Infrastructure Committee.

Former mayor Andy Foster is sitting here loving this contribution, because he knows exactly what happened in that select committee. It was a muck-up that cost the Minister, suspiciously, exactly what this bill saves him. So here we are—here we are—using the House’s time, not only using central government resources that cost probably more than $400,000, which is saved in this financial year, but not only that, we’re asking every council around the country to tell their legal departments, “Quickly work out whether we can comply with this. It’s a very short time frame; we have to comply with it by 1 July. Please, quickly go and give me some advice.” Shout-out to all those lawyers around the country who are watching this because they need their governing bodies to be able to make decisions which are required under this change. I hope you know that this is to save $400,000 for the central government. That’s not $400,000 of money that we’re taking from some big corporate entity and that’s not $400,000 we’re taking from another pot of money that we are levying to change behaviour; that is $400,000 that is coming directly from local ratepayers straight into the central government coffers. Thanks to everyone who has made an effort today to understand this bill that has cost far more than the amount it has saved. This is the worst kind of legislation.

Now I can get to my actual points. I’ve got five minutes left, and I intend to use them all, because the opposite members are so keen on this speech, so I will start that. The first point that I have to make is that given that there were no answers at the committee stage, I think it’s still important for not only this House but for local government to understand what the real cost of the Crown administrating these fines is, because if it was a full proportion, 100 percent of the 10 percent levied by the Crown on top of these fines, then we’d be in a situation in New Zealand where the taxpayer was subsidising local government to do this. We haven’t had an answer to that, but that is a situation that we should properly understand, because it’s not appropriate for central government to subsidise local government to levy fines in that way. It creates a perverse incentive for local governments to set fines in a way which doesn’t result in the kind of policy outcomes we want.

So we then need to understand that. Is the fines regime working for local government, if that has been the case for a long time? What kind of perverse incentives has it created to levy or not levy parking fines, and do we have a situation in our cities where parking fines are not being administrated in the way they should?

Ingrid Leary: Invercargill.

ARENA WILLIAMS: Well, exactly—exactly. My colleague the honourable—not the honourable; I’ve given you a promotion. My colleague Ingrid Leary—

Ingrid Leary: Dishonourable.

ARENA WILLIAMS: —who is an excellent local MP—she’s not dishonourable as she says—gave us a really good example about how, when parking fines are levied ultra vires to the law because the law hasn’t been used in the correct way, we then have a real problem that affects real consumers in their everyday lives. These regulations need to be applied accurately, and everyone needs to understand how they work.

So we may need to better understand this, and I’m sure members from around the House, especially those Green members who have made contributions tonight, would be interested in a select committee inquiry at the Transport and Infrastructure Committee about whether parking fines are being levied appropriately in our cities and whether they are creating the kinds of policy responses and the kinds of incentives and disincentives for people that we would want. But the Minister wasn’t able to provide us with that information. We don’t know. A useful conversation starter would be at the select committee stage.

The next point I have is about the secondary legislation which sets these fines, because at no point in the committee stage were we able to actually engage with the values of that. Is secondary legislation the appropriate way to set parking fines? Should councils have their parking fines set in primary legislation so that ordinary people, like you and me, can have our say, because as they are currently set, it’s simply a technocratic exercise of being able to set them, and, really, the reality there is that people don’t review these things often. They’re not something which is regularly kept up with, and so the appropriateness of parking fines is not something which is subject to the democratically elected process.

Perhaps they should be in the primary legislation. Perhaps, you know—imagine that we had a local government Minister who was committed to localisation and actually was allowing councils to set their own fines. We have one very large council, Auckland Council, that is now the size of some Australian states, that would be able to set its own fines and has the internal capacity to do that. Why hasn’t the Minister come to this House and suggested an amendment like that, which would actually make a difference and would actually be worth this House’s time, because we would be able to set the kinds of incentives that were useful for cities to decide where parking was appropriate and where it was not.

This is a bill—and I’ve said it before: it’s a penny-pinching bill that sets a parking fine tax, but it was introduced in the context of a Budget which did nothing for local government. The Budget has no commitment for additional funding and financing tools for local government—nothing—and with only $40 million committed to the water reforms, that money sits at central government. We have a Prime Minister who comes to this House almost every week telling us that he has succeeded in delivering local water with Auckland Council, where Auckland Council set the agenda and came up with the solution themselves. Great work, but how does that commitment allow local councils to lead that work around the country when it’s sitting with central government? There is nothing for local government to actually empower local decision making here. There is no commitment from the local government Minister to actually resource the work that needs to be done, and that is a missed opportunity.

There is no national resilience plan in this Budget—it has been scrapped. There is no climate resilience funding—that has been scrapped. Those are initiatives which resulted in local programmes which otherwise funded local councils’ work. That is the kind of Budget investment we need, not $400k taken out of local councils and put straight back into the Government coffers because of an administrative error.

CAMERON BREWER (National—Upper Harbour): I want to talk specifically to this bill, and I want to also make a public service announcement. This bill is part of a package of proposals that support the Government’s Budget goal to deliver efficient, effective, and fiscally sustainable public services. The public service announcement is this—one word: www.budget.govt.nz/taxcalculator. I commend the bill.

ASSISTANT SPEAKER (Teanau Tuiono): The next call is a split call. I call Glen Bennett.

GLEN BENNETT (Labour): That previous contribution was outrageous, and it was shameful in this House—absolutely outrageous. I think it is appalling and it is shameful that this is democracy—this is evidently democracy, and I find that a sham and I find it shameful.

Democracy, so we say, is a wonderful thing, but democracy is a strange thing. Democracy also is a slow burn, and as I watch and as I listen, and I hear the meerkats on the other side going on and jumping up and down, I feel like democracy is being ridden roughshod over today, because this piece of legislation, this Public Finance (Fines Collection Costs-Budget Measures) Amendment Bill, is nothing more than slamming things through in urgency which do not need to be slammed through. They need to be parked. People need to put their money in the meter, they need to wait, and they need to relax and chill out for a bit and then to wait the time to get this legislation right, to allow local government to have their say, and to allow local government to engage and be part of democracy. But, no, we’ve got to run fast; we’ve got to run loose—that is what this Government does.

As we know, the “c” word—that’s right, I’m going to use the “c” word, Mr Speaker. I’m not sure if it’s the Standing Orders, but I am going to use the “c” word. It’s all about choices. And this Government is making some serious choices which are offensive—some serious choices which are rude and are disgusting. The “c” word; they are making some really bad choices. And it is grotesque, and teenaged children and little kids who are watching tonight should close their ears right now, because that “c” word—the choices are horrific as we watch what is going on here.

Now, we look and we watch what this Budget is about. And nature, it’s been parked—did they have to put their money in the meter? Did they have to wait and ensure that they clipped their ticket on the way down for the National Party? We look at our just transitions trying to move us forward. It’s been parked. But, that’s OK, we’ll throw some money in the meter, and, of course, they’ll clip the ticket, and they’ll move on, and we’ll ignore our just transitions. Oranga Tamariki, our most vulnerable children—they’re being parked, and no money can be put in the meter to justify that, because that is outrageous and that is wrong, but that is what this Government is doing with this Budget.

When it comes to funding cancer drugs, when it comes to climate change, when it comes to universal free prescriptions, they are parking it all, and they are hoping, and maybe some of them are praying and hoping—I don’t know what their beliefs are—that, somehow, when they leave this House, maybe Monday, Tuesday, Wednesday next week, when we get through this debate, they can justify to their constituents, they can justify to the people of Aotearoa New Zealand, that the Budget that they have presented and championed and that they’ve said so many wonderful things about—about how they’re actually going to be able to look people in the eye and say, “I’m sorry.”, because we use the “c” word in this legislation. We use the “c” word in so many pieces of legislation. We made choices that are taking New Zealand backwards, choices that are offensive and are wrong.

This legislation is only adding that extra 4 percent on top of that, obviously, in terms of the ticket that they can clip, and that is wrong. I just think, as we sit here in this place and as we look at what is going on in New Zealand, that they are looking and finding every way they can to find a bit of extra money behind the couch—you know, a bit more money behind the sofa to see how they can find a way to fund their tax cuts—because, of course, there’s the “b” word. And I’m going to be outrageous: I’m going to use two offensive words tonight: the “c” word and the “b” word. That’s right. They’re going to be borrowing—borrowing; the “b” word. They’ve been borrowing for these tax cuts and doing everything they can with this legislation to ensure that they can find every little cent and every little penny they can to ensure that they can give their tax cuts to their mates and to their friends.

So, as we look at this legislation, as we look at urgency, it is unnecessary. It should have gone to select committee. This legislation should have at least talked to our local democracy and our people. This is wrong.

PAULO GARCIA (National—New Lynn): Behind all of the emotion and the words and the rhetoric and the forgetfulness of the past six years and where we are now, this bill is an opportunity, a tool, to get the Government books back in balance. I commend this bill to the House.

INGRID LEARY (Labour—Taieri): This is just really bad law, and it’s really unfair. If I think of my own family, I have the blessing of being from a mixed Dutch and Pasifika family, and the reality is that members from both sides of my aiga—my extended whānau, and sometimes in our own little unit—will do things like forget their registration on their car or maybe park for five minutes longer or whatever. And they get a fine, and then it becomes difficult, because in my family, most of us don’t have accountants, we don’t have very organised ways of doing things, and we work organically. The fine comes in, and then we hang it on the fridge, just as Dr Duncan Webb said, and then for many of my family, it comes down to, “Am I going to bring something to the church service on Sunday to contribute—

Hon Member: Or going back to the Waiheke vineyard!

INGRID LEARY: —or am I going to feed the extended family who are coming around? Oh, maybe I’ll just keep that on the fridge and leave it alone.”

Somebody mentioned something quite sarcastic over there, and I’m speaking really seriously here. The things that the Government members find funny and trivial are realities for many people. So when we look at the impact of this law, what happens in that situation? Somebody doesn’t pay their fine, maybe they even stick it in the bottom drawer, they get reminder letters, it becomes overwhelming, and then the Ministry of Justice rings up and says, “How about you do a payment plan?” And you say, “Oh, yep.”—and everything else that you have to say to make them go away—and you agree to have a direct debit out of the bank account. The direct debit comes around, and, again, the cost of living takes over, and, next minute, there’s a $25 bank charge and maybe another one when it bounces and maybe another one. And these bills line up and pile up and pile up and become quite unmanageable.

And this is the situation that is really unfair for families that are going to be impacted, and it’s come out in the costs recovery impact statement, in the report that talked about the unfair impact. Now, that is bad enough. But, then, if we look at the jurisprudence of this—and the lawyers on the Government benches should know what I’m talking about, about the strict-liability nature of fines—and the fact that people who are in this situation in the first place, it might be a small fine, but it starts as a guilty-until-proven-innocent. So to contest, perhaps, that that little registration ticket that was supposed to be shown on the window wasn’t visible, because it fell on the floor, somebody needs to be able to contest that. They have to pay the fine unless they can prove that they weren’t liable. So that means, under the laws of natural justice and normal jurisprudence, we should take even more care when we are imposing additional cost or additional liability to those groups of people. But what are we doing here? We’re sitting in urgency and without a select committee process—and I’ll come to that in a minute, because there’s some really sloppy drafting in the bill that we didn’t even get to in the committee stage, because the debate was closed down before we got to ask questions about some of the words in Schedule 4.

The Minister was sitting in the committee stage trying to say that this is good public policy and that there was an evidence base for saying that it was about cost recovery. There was no evidence base to prove that. We asked numerous questions, from this side of the House, about what the numbers were and what the baseline was and also, actually, what type of fee this was even going to be. It appears that it’s a tax, when I look at it, because we know that a levy looks across a situation and requires payment across a class of expenditure. A fee is much more about a sort of vertical digging down. So this would appear to be a fee. But also what was deeply concerning was the purpose, because if it is a fee or a levy—and it’s being dressed up as a levy; I actually think it’s a tax, but it could be a fee—it has to be justified really carefully, and there has to be a good reason to do it. Now, under the legislation, it is saying in the purpose that this is about cost recovery, but in the title, it is talking about “Budget Measures”. What we’ve heard in the contributions from the Government tonight is that this is a way of trying to fill a fiscal hole.

We know that the Government had to borrow $12 billion to pay for the fiscal hole created by the $2.9 billion handout to landlords. And now they’re scrambling around. But a good law would be very clear about whether the purpose is cost recovery or whether it is a tax, and what we have had is mixed messages. We asked that in the select committee—no, we didn’t have a select committee process, of course; in committee—and we didn’t get a satisfactory answer. In fact, we put amendments forward to say, “Let’s take the words ‘Collection Costs’ and just keep ‘Budget Measures.’”, because this is clearly about trying to fill the Budget hole that’s been left. Who’s it impacting? It’s impacting people who are the least likely to be able to afford it. And I think that’s really unfair.

When I look at the bad drafting—and there’s lots of things around the drafting, including the date. I mean, July coming up—that is extremely fast and doesn’t allow for the systems to be able to cope correctly. And I’ll come to that in a minute with the Invercargill example that I’ve mentioned. But if I look at the Schedule, in new Part 4, clause 11(3), in this clause it talks about “amount of a fine includes”, and then it’s got the words “without limitation, an instalment—(a) of the fine; and (b) paid under a court order”, and so on. Now, what really concerns me is bandying around the legal words “without limitation”. If we had a select committee process for this, that would have been tested. We would have tried to understand. If it is a fine without limitation, a strict liability offence where the mens rea is already assumed unless somebody can prove that it’s not, what do we mean by “without limitation”? I don’t even get to ask that.

What do those words mean? They could mean anything. Is that going to be something about interest, is it going to be some other thing that is added on to the final—I’m not sure, and perhaps it’s just irrelevant. I suspect the answer, if we had got to this in the committee stage, would have been to cross those words out. But that is sloppy drafting, and the members opposite know that, in this House, it is about precision of language. That is what creates fairness and that is what avoids unintended consequences. And so it’s really disappointing to see that kind of drafting. And it’s no surprise, given that we’re doing this in urgency and that we’re doing it without a select committee, where we would have had people like the Law Commission, where we would have had interested groups and others say, “Actually, Minister, or, actually, select committee, what do those words mean? Do we need to strike them out, or do we need to define them further?”

I turn finally to the example of Invercargill. And I did mention this in the committee stage, because the Government treated the questions that we asked with a lot of disdain and acted as if this was some kind of ridiculous situation in which we were posing hypotheticals. Just last week in the newspaper, the Invercargill council have done the right thing, actually. They have decided to repay $500,000 worth of parking fines to local people. I commend them for doing that. It was a difficult decision, and the reason is because they had made a mistake under the administration. And we know with strict-liability offences that the legal requirement is for the law and the evidence burden to be very strictly applied, given that the burden of proof has changed from a presumption of innocence to a presumption of guilt unless innocence has been proven. So I do commend them for doing it. But what really concerns me is that the Invercargill City Council is also trying to consider whether to pay $90,000 to subsidise public transport for the kids who won’t get that now that the subsidy’s gone. And they need to catch buses to go from the south of the city to the north of the city to play their sports games. And that is something that is around social inclusion. It’s keeping kids out of trouble and keeping them active.

You may ask, “What has this got to do with the bill?” Well, everything. This is a direct result of administration and carelessness where it had profound results that had a fiscal cost which meant that, now, our most underprivileged and our most needing people who really want to get out there, play sport, and participate cannot do so, because of the type of administrative shonkiness that this bill presents. It’s lawmaking that’s done from the Wild West. It’s done far too fast. It’s done for the wrong reasons—it’s done for the intention of filling a tax hole rather than a genuine cost recovery reason. We know that because we haven’t seen the evidence base. And it breaks my heart, because I know, from the communities that I live with, that the people who will bear the cost of this, because it will be passed on from councils, will be people like my aiga and my Dutch extended family, who just can’t afford to pay the fines and get hit time and time again. It’s bad lawmaking.

RIMA NAKHLE (National—Takanini): Thank you very much. Look, I’d just like to respond to a couple of thoughts that were thrown around throughout this whole debate. The words “sneaky little bill”—this bill was referred to as a “sneaky little bill”. Well, what about the sneaky fuel tax and the sneaky ute tax that were thrust upon our people in the last six years? And the “broken promises” they spoke about—well, what about the promise to extend free breast cancer screening for people up to the age of 74 years old? Broken promises, 2017, 2020—

Ingrid Leary: Point of order, Mr Speaker. This is the third reading of the bill and I’d just like to point to the fact in the third reading, the member must speak to this particular bill, rather than referring to other bills. So I just hope you can make a ruling on that, sir.

Hon Andrew Bayly: Point of order, Mr Speaker. I just wondered when we got our fourth Speaker.

RIMA NAKHLE: This bill was being referred to as a broken promise—

Ingrid Leary: Speaking to the point of order, sir. Speaking to this point of order raised by the Hon Andrew Bayly. Mr Speaker, I hope you will make a determination on it. I’m having some difficulty understanding what the member was asking, so if he could indulge the House and re-ask his question, perhaps we could then get you to rule on it.

ASSISTANT SPEAKER (Teanau Tuiono): Could you repeat that, Mr Bayly?

Hon Andrew Bayly: I’m just asking when was the fourth Speaker appointed to assist you in your Chair role? I didn’t think a fourth Speaker had been appointed to a new role.

ASSISTANT SPEAKER (Teanau Tuiono): Well, thank you for thinking about my benefit. Just so I must make a ruling on that, if the member can confine her comments to this bill.

RIMA NAKHLE: To the bill.

ASSISTANT SPEAKER (Teanau Tuiono): I understand you all want to stay here tonight, but let’s get a move on.

RIMA NAKHLE: This bill is a great bill, and I commend it to the House.

A party vote was called for on the question, That the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill be now read a third time.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Bill read a third time.

Bills

Waste Minimisation (Waste Disposal Levy) Amendment Bill

First Reading

Hon PENNY SIMMONDS (Minister for the Environment): I present a legislative statement on the Waste Minimisation (Waste Disposal Levy) Amendment Bill.

ASSISTANT SPEAKER (Teanau Tuiono): That legislative statement is published under the authority of the House and can be found on Parliament’s website.

Hon PENNY SIMMONDS: I move, That the Waste Minimisation (Waste Disposal Levy) Amendment Bill be now read a first time.

One of the Government’s priorities is to improve and protect the environment from harm, particularly focusing on the most harmful waste. The Government also wants to prevent the impact of, and support recovery from, extreme weather events. The Government wants to do this while achieving financial stability and sustainability across the public sector. This bill is a step towards this.

The Government is changing the Waste Minimisation Act 2008 to allow the waste disposal levy to be spent on a wider range of activities, and to increase the levy incrementally over three years from July 2025. Broadening the scope of the waste levy will help fund a more comprehensive set of Government waste and environmental priorities. These changes mean that as well as waste minimisation activities, the levy can also support projects to improve freshwater quality, remediate contaminated sites, and restore the health of important New Zealand ecosystems. We will be able to fund waste reduction, ways to reduce harm from waste, resource recovery, and reducing organic and construction and demolition wastes.

Mr Speaker, I wonder if you would indulge me moving away a little from the bill at the moment, because I feel, as the MP from Invercargill, I can’t stand here talking about demolition waste without noting that this week in Invercargill, as the pyramid museum was being demolished—the museum held a tuatara enclosure. That enclosure was closed, and the tuatara were taken out of there in February 2023. But this week, as the demolition was occurring, four live baby tuataras were found in the enclosure. So what resilient little critters they are.

However, thank you for indulging me in that and I will return to the bill. The bill will mean that the levy funds can support local authorities with the costs of managing waste from emergencies. This includes supporting councils to repair or replace waste infrastructure damaged during emergencies. The levy will also fund the Ministry for the Environment’s waste and hazardous substance responsibilities.

This adjustment will achieve cost savings while contributing to improving and protecting the environment from harm. This is a pragmatic solution to the current fiscal situation to ensure that the ministry’s important work programme and environmental funding initiatives can continue. As well as broadening the scope of the levy, the levy will continue to increase incrementally over the next three years from July 2025. For municipal landfills, it will rise in $5 increments from $60 per tonne at 1 July 2024, to reach $75 per tonne on 1 July 2027. For construction and demolition landfills, it will rise in $5 increments from $30 per tonne at 1 July 2024, to $45 per tonne on 1 July 2027. For managed or controlled landfills, it will rise from $10 per tonne at 1 July 2024, to $15 per tonne from 1 July 2025, followed by a further increase to $20 per tonne on 1 July 2027.

These levy increases will provide further incentives to reduce waste going to landfill, as well as providing additional revenue towards Government waste and environmental priorities. This means central and local government can make a bigger impact on reducing waste and improving the environment. It means there’s a stronger financial incentive for people and organisations to seek alternatives to landfill, like reusing, recycling, and composting.

The Government will focus on investing the levy in the most effective way and to fill gaps in New Zealand’s waste infrastructure without crowding out the private sector. I will be particularly focused on measures to decrease construction and demolition waste so the levy changes support the building sector.

Importantly, the local government proportion of the levy will remain at 50 percent even with the increased revenue. Local government will continue to fund waste minimisation in line with their waste management and minimisation plans. This means councils can continue to invest in local solutions to reduce waste, like education, kerbside collections, food waste redistribution schemes, and supporting local business to reduce their waste. These changes will also support councils and communities to deal with the legacy of contaminated sites, including historic landfills and other sites that are vulnerable to the effects of severe weather events.

The changes will enable levy funds to support the remediation of these sites. The changes will mean that the Contaminated Sites Remediation Fund appropriation is replaced with levy funds. I also intend to substantially increase the amount of funding available for these remediation projects. It is estimated that there are hundreds of historic landfills and other contaminated sites vulnerable to the effects of severe weather, so we need to tackle this proactively wherever possible. I know councils have been asking for more support. No one wants to see another Fox River landfill event, where a 2019 severe storm spread waste along 21 kilometres of riverbed and 51 kilometres of coastline.

The changes mean we can fix these sites before they cause a problem, and support communities after severe weather events. The bill will also enable the Secretary for the Environment to approve the levy waiver for waste disposal from the remediation of contaminated sites and historic landfills, meaning we will be able to further support local government and communities to get these sites cleaned up. The frequency and magnitude of emergency events is increasing, partly due to the rise in severe weather events.

To date, the cost of managing waste caused by these events has been dealt with on an ad hoc basis. No standing funds were available to respond to community and council needs to deal with emergency waste. The changes will enable the Government to help fund the management of emergency waste, including repairing or replacing waste infrastructure damaged during emergencies. This will reduce the financial burden of these events on both central and local government.

The bill will enable levy funds to be used to support activities and responsibilities that address waste reduction, reduced harm from waste, and support other environmental outcomes. The bill will allow the waste disposal levy to be spent on a wider range of activities and to increase the levy incrementally over three years from 2025. The levy will also fund the Ministry for the Environment’s waste and hazardous substances responsibilities, allowing this important work to continue. This will contribute towards meeting the Government’s priorities while achieving fiscal savings.

The bill will enable an increase in the funds available for contaminated site remediation, which will benefit many communities. It will also enable the Government to help fund the management of emergency waste, including repairing or replacing waste infrastructure damaged during emergencies. In addition, territorial authorities will receive an increase in revenue from their levy allocation over the three-year period.

I commend the bill to the House. The bill will be progressed under urgency through the House. The progression under urgency, if the House agrees, will allow the fiscal savings to be realised for the 2024-25 financial year.

ASSISTANT SPEAKER (Teanau Tuiono): The question is that the motion be agreed to.

Hon RACHEL BROOKING (Labour—Dunedin): Thank you, Mr Speaker. Look, it’s interesting to be here at just on 11 o’clock on a Friday night, talking about the waste levy, but luckily for me, the waste levy is something that I’m very happy to be talking about at any time of the day or week.

Of course, the waste levy is something that was increased around 2020 and in a hypothecated fund, the idea being that money gained from waste being disposed of would go to initiatives to decrease waste. That’s how hypothecated schemes work. As the Minister, the Hon Penny Simmonds, has said, this levy was split in half; half of it goes to the local council where the waste is taken and half goes to central government. Under the Waste Minimisation Act, different councils have to have waste minimisation plans, and we all know that our local council, our city council, our district council, or our unitary council—depending where you live around the country—does a lot with waste. So it makes good sense that half of that money goes to those local governments. The other half stays with the Government, and the Government has funds—the Waste Minimisation Fund and the Plastics Innovation Fund—that then are contestable and can go to projects around the country. We heard the Minister say about the importance of waste infrastructure around the country, and I’m sure she’ll talk some more about that sort of waste infrastructure, but some of it is for the often quite complicated kit that is used for recycling, or it might be for large-scale composting and a range of issues. So the waste levy is a good thing.

The criteria are very tight at the moment in the legislation, and Labour’s position is not in opposition to the loosening of the criteria in part. However, this bill goes far too far in the widening of those criteria, and I’ll talk more about that in both the second reading speech and, of course, in the committee stage, as we’re under urgency and this isn’t going before a select committee. The question is: why does it go too far? I’ll talk more about this as well. The supplementary analysis doesn’t talk about how far this bill goes. The idea that the criteria should be extended to remediation of contaminated sites—so the landfill issue that the Minister referred to at Fox River—no problem with that. The idea that when there are emergency situations such as we had in the Hawke’s Bay and other areas of the North Island last year—no problem with that extension. The problem is that the bill says any other environmental thing whatever, and there’s no nexus to waste. And this is a levy, it’s not a tax, so there does have to be some nexus, and it’s the absence of that nexus that we are opposed to. I have Amendment Papers on the Table that will fix that problem, will still allow the extension to remediation and emergency, but not go to just anything that’s not related to waste at all.

So why do we have a bill in front of us that seems to change the process to now extend to wider environmental issues? The reason is, of course, that this Budget is terrible for the environment. Everything is cut. We knew, of course, that there were those cuts in the mini-Budget to environmental programmes and to the Ministry for the Environment, and now we have that 7.5 percent cut. We know, of course—and we’ve had this throughout the past six months—that every single climate mitigation initiative has been cut, and we’ve got rid of, of course, with this Budget, the climate emergency fund. We know that the Department of Conservation is being cut. That’s all on-the-ground conservation work. We know that the Climate Commission has been cut. Programmes for installation have been cut. Half-price public transport—cut. So all of these reasons, all of these cuts—we do need to do some things for the environment. What we see here, and what we see with this bill, with this widening of the criteria, is that it’s for the waste levy to pay for all of these things. And, of course, it doesn’t pay for all of those cuts—not at all—and it is needed to continue with what the Minister spoke about.

We do need funding for the remediation of landfills. We do need funding for the increase of waste infrastructure. But this bill goes too far, so we will be opposing it. We do have Amendment Papers for the Minister. If she is of a mind to change her mind, then that position can change.

KAHURANGI CARTER (Green): Thank you, Mr Speaker. Well, I am pretty excited to be speaking about waste minimisation. It is one of my favourite topics and I have dedicated my career to waste minimisation.

Simon Court: Same! We’re going to get on.

KAHURANGI CARTER: Amazing—let’s do this. Let’s do it for our future generations and because environmental action is cool. That’s right—it’s cool. And I know you all want to be cool.

So what does this bill actually do? Well, I was brought up with the mantra “waste not, want not”, and I’ve taken that with me into my life. That is why I have been dedicated to waste minimisation since before it was cool—just like my learned colleagues here in the Green Party, and our members. So what is this bill actually doing? Well, like everyone here, I think that raising waste levies is an excellent idea. It is an excellent idea because what it means is that when industries have to pay more to send their rubbish to landfill than they do to reduce rubbish, then we’re going to be reducing that waste. It’s a great thing. Unfortunately, $5 a year won’t even keep up with inflation, and if we look at similar countries to ours—so in New South Wales, $160 per tonne—

Dr Hamish Campbell: It’s a state, not a country.

KAHURANGI CARTER: A state, thank you. In Victoria, $130 for a tonne, but in New Zealand: only $60—less than half than countries who are similar to us. So you really need to look at why that is, and we need to actually understand that we don’t need a bill to increase the waste levy; we actually don’t. We can just do that through our normal regulation process.

When I look at this bill and really dig into it, it’s like: what is this bill really doing? And my colleague here, on the right, actually got the nail on the head. What is happening is that the Government knows that New Zealanders care about climate action and they care about waste minimisation. That is why, in 2018, the Colmar Brunton poll showed that the thing that New Zealanders most cared about was that they were worried about the build-up in plastic in our environment. They care about the 1.76 billion plastic containers and bottles every year that we use here in New Zealand. And I see those hard-working Kiwis out there taking waste minimisation action, taking climate action. They’re using reusable nappies instead of disposable diapers. They’re doing composting. We’ve got teenagers who care about mindful fashion and—

Mike Butterick: Wearing wool.

KAHURANGI CARTER: Wearing wool, absolutely—that we can compost and we can take it and put it into our compost. What this bill is doing is it is taking money away from waste minimisation.

We have a $2.3 billion infrastructure deficit in waste minimisation. Where is that going to come from when you’re slashing and burning environmental protections, when you’re slashing and burning climate action? We need to put out that fire that you are creating by taking money from the waste minimisation levy. Let me say that again: we are $2.3 billion in deficit in infrastructure for waste minimisation. It is so important that we are keeping that waste levy in waste minimisation. Cutting $10 million from the Ministry for the Environment—with my former colleagues who work so hard on innovation and vision for this country.

We need to take responsibility for our waste, and clean up after ourselves, because our children, and their children in every generation after, deserve an ambitious Government—one who cares about Papatūānuku, one who cares about a livable planet for their mokos. We must look at waste as an opportunity to live in harmony with nature, because our children deserve it. When we continue down this exploitive, extractive system which we have right now, which is a straight line from extracting precious metals and finite resources from the environment and sending them on a straight line all the way to the dump, where our future generations are going to be mining those finite resources—we have to do better for our children, we can do better for our children, and I believe we can.

SIMON COURT (ACT): Thank you, Mr Speaker. The ACT Party’s proud to support this bill, the Waste Minimisation (Waste Disposal Levy) Amendment Bill.

I just want to give a bit of background and context for why I personally share the kaupapa of this bill. For six years, I worked on a solid-waste landfill. I qualified as an operator. Wheels, tracks, and rollers on a big beast like this. [Holds up picture] It was crushing thousands of tonnes of waste a day. I worked at a landfill out of a Portacom for six years, watching thousands and thousands of trucks a year bringing waste and dispose of it in landfills.

Hon Scott Simpson: Then you’ve come here.

SIMON COURT: Shortly after—Scott Simpson asked why would I come here. Why would I come here? Well, I’ve got to say, sometimes you can’t engineer a way out of a problem that the Government has caused—and successive Governments are the reason why we’re here today having to try to solve the problem of waste disposal that previous Governments failed to solve.

I want to give you an example. In 2005, I went to a waste industry conference when a former Labour environment Minister announced there’ll be zero waste to landfill by 2040. I thought, “That person has no idea how to achieve that.” In 2005, there were 2.5 million tonnes being disposed of in landfills in New Zealand; by 2018, there was around 3.5 million tonnes a year. So under a whole succession of well-intentioned but, unfortunately, people who had no idea how to actually deliver on good policy and outcomes, here we are today.

The reason I’m proud to support this bill—and I think it’s the right thing to do now—is because the original purpose of the original Waste Minimisation Act was to decrease waste disposal. I mean, that’s laudable, right? To “protect the environment from harm;”—well, of course, every day we get up in New Zealand, most people want to protect the environment from harm—“to provide environmental, social, economic, and cultural benefits.” Well, how on earth do you put all those things together on one plan so you actually know what to do?

This bill changes the purpose statement to actually promote and achieve waste minimisation. There will be tests, there will be cost-benefit analysis for the investments made with funds recovered from levying waste at the landfill gate and then applied to waste infrastructure and waste minimisation. Achievement will be—

Steve Abel: But also other things.

SIMON COURT: —a test, Mr Abel.

Steve Abel: But it’s going to pay for decontamination of—

SIMON COURT: We’ll get to that—we’ll get to that, Mr Abel. This is not lip-service, what we’re doing here. These are not slogans; these are not good intentions. The changes to this bill achieve waste minimisation.

Now, local government has the responsibility to minimise waste; manage waste. What we saw after Cyclone Gabrielle were some real challenges in separating out the silt, the twisted piles of fencing, the plastic debris, the geotextile cloth. This bill will allow funds recovered from the waste levy levied at landfill gates to be used to fund waste infrastructure, following cyclone disaster recovery.

One of the other good things this levy will be able to fund in future is more contaminated site and landfill remediation. One of the other tasks that I’ve carried out as a civil engineer is designing and carrying out remediation on some of New Zealand’s most hazardous sites and landfills. Some of those sites that are falling into the sea, where the rock protection, the sea walls aren’t sufficient, and where it would be fair to say that as a legacy of the past which remains unfunded by local government and by central government, there has not been one place—

Scott Willis: That’s right. This Budget has no climate adaptation.

SIMON COURT: —that’s right, that’s right. There has not been one place that local government and its partners in the private sector who actually have the machines that actually do the work can go to get funds to remediate landfills and deliver waste infrastructure to minimise waste to landfill.

So there is a role for a waste levy. Now, it would be fair to say that ACT is not a party that supports increasing charges and taxes and levies on the productive sector. But there is a role for a waste levy as long as it is applied to the right projects and the right programmes that achieve environmental outcomes and that meet a strict cost-benefit test.

That is why the ACT Party supports this bill and commend it to the House. The Minister for the Environment, Penny Simmonds, has done a great job and we look forward to getting a little bit more out and aerate a few more issues as we get into the committee of the whole House stage. Looking forward to it.

ANDY FOSTER (NZ First): It’s great to see such enthusiasm right across the House for waste minimisation, for looking after our waste properly and minimising waste. I’m passionate about recycling, passionate about waste minimisation myself. Look, I just want to talk about this, the waste levy. The waste levy has been around for about 15 years—it’s hypothecated to waste—and what we’ve seen is it’s been steadily increasing over a period of time so that there is a stronger and stronger incentive to minimise waste, and the charge is also gone not only for class 1 landfills but now also across class 2, 3, and 4 landfills.

What this bill is all about is flexibility, because I’ve seen quite a number—in local government—of proposals which have got funding. Some of them are absolutely brilliant, but some of them are not. I think there is the danger, sometimes, of having this free money sitting there that has got to be spent somewhere, and sometimes it’s not actually particularly brilliantly spent. And I can see some mystification on the other side there, but I can point to you, Mr Abel—some of the projects which have been funded, you look at that and go, “That is not a good spend of money.” As a country, we need to make sure that the money we spend anywhere is really well spent.

Look, this bill does two things. One, it continues to increase the amount of cost that is imposed on people who are creating waste and disposing of waste—that is a good thing; it keeps that incentive becoming greater and greater to minimise waste. But the second thing it does, which is really important, is it gives more flexibility around how that waste levy is used: it’s about allowing us to do more clean-ups of contaminated sites; it’s about allowing us to respond to emergencies, and we heard the example of the Franz Josef one; and also about wider environmental programmes. So it’s useful flexibility.

I think it does two other things. One, is it means that some costs which are currently paid by the Crown will then come from this levy, so it’s saving money. Secondly, it means that there is going to be greater competition for that waste levy, and that means, I think, that we will end up with higher-quality spending because some of the lower-quality things will drop off there. So I think this is a very sensible approach, and I commend the bill to the House.

TANGI UTIKERE (Labour—Palmerston North): Kia orana, Mr Speaker. It’s a pleasure to follow those two previous speakers. I was looking forward to hearing Mr Foster’s contribution, someone who has been involved in local government for many years prior to coming to this place, so for him to make a two-minute-and-30-second contribution—

Andy Foster: It was two minutes longer than they wanted me to.

TANGI UTIKERE: —in the context—yes, Mr Foster; I’m pretty sure it was two minutes longer than they may have suggested to you. But, look, don’t be confined to the party whips over there. If you’ve got something to say, then I suggest that, given we’re in urgency, you say it.

Joseph Mooney: Wasted almost a minute on that.

TANGI UTIKERE: It was also very—what’s that, Mr Mooney?

Joseph Mooney: Wasted almost a minute so far talking about that.

TANGI UTIKERE: Well, look, we’re here because we want to be here. The other thing is I want to just follow up on the issues that were raised by Mr Court. Now, Mr Court and I spent some time on the Environment Committee last term. It’s fair to say that we’ve had our disagreements on policy from time to time, but, again, I commend him on taking a full call, which seems to be a rarity for Government members in this current phase of urgency. Actually, I have to say that he did get me thinking about some of the things that he was mentioning, particularly around funding, but he hasn’t tended to sway me—something that seems to be a common feature between the relationship that he and I might have.

But it is interesting that we are talking about waste at 11.20 on a Friday night and that there is a particular focus around where this split might be. Prior to coming to this House, like Mr Foster, I spent a decade in local government, so I know the importance that this particular levy does actually place on decision-making processes and opportunities for local councils all around the world—all around the country and all around the world, actually, when it comes to global waste. But what’s really interesting is that as the House is progressing this through urgency at this late hour of the evening, there actually won’t be an opportunity for councils in my region or in other regions to actually have their say on this, because the Parliament is going to, with the Government’s support, basically ram this through under urgency. I think that’s a shame, because already in some of the smaller contributions that we’ve had this evening, we’ve heard of some of the very creative initiatives that councils all around Aotearoa New Zealand—

Joseph Mooney: Two and a half minutes; still nothing on the bill.

TANGI UTIKERE: —are embarking—well, Mr Mooney, it might be two and a half minutes. It would be longer than any contribution you’ll give under urgency, I’d suggest. But I do think that the 50:50 split with local government is really important. But hearing what Palmerston North City Council might have to say on these measures would have been quite helpful. Hearing what the Tararua District Council would want to have to say about this would be quite helpful. Hearing what Manawatū District Council would want to say would be quite helpful. And I’m sure the member for Rangitīkei would also agree that those councils have an opportunity to say and feed into this process.

My colleague the Hon Rachel Brooking makes a very good point in her contribution, and that is that there is a real distinction between a levy and a tax.

Katie Nimon: Repetition.

TANGI UTIKERE: A tax—well, it’s not repetition, because I’m going to go on to the distinction. The Hon Rachel Brooking touched on the need for a nexus, and I think that’s really important, because where a tax might be effectively garnered which can be spent on pretty much anything, a levy is much more specific. This is the context within which this bill comes to this House. It’s around a waste minimisation levy, and so there needs to be a particular distinction between—even though it is hypothecated—where the levy is drawn from and where the levy will then be spent or where it will go.

So I think it’s unfortunate, again, that local communities, as we work through this process, will not actually have an opportunity to share whether they think the 50:50 split is right, whether they think the widening of this criteria that the Minister for the Environment is actually suggesting is wide enough or too wide. Here on this side of the House, we think that the widening exercise is far too broad and needs to be curtailed. And so, as the House progresses to consider some of those amendments that my colleagues on this side of the House will have in their name, I do hope that the Government, albeit in urgency, will be open to the suggestions in light of the fact that communities have not had an opportunity to have their say. My invitation to the Government is, as we move through the various stages this evening and, indeed, tomorrow, and perhaps beyond, that they do turn their mind to be open to the fact that communities have not had an opportunity to participate in this process and that there is a question of fairness. On that basis, at this stage, without any changes, we’re not supporting this bill.

Hon SCOTT SIMPSON (National—Coromandel): Thank you very much, Mr Speaker. I listened carefully to the contribution of the Minister, who I thought put forward a very cogent argument for a prudent, practical approach to the waste minimisation levy and how it could be more flexibly spent in a way that advances the National Party’s blue-green principles that we’ve held dear for nearly 30 years. So, on that basis, I can support this bill wholeheartedly and I do so with enthusiasm.

GLEN BENNETT (Labour): Kia ora, Mr Speaker. I know it probably is difficult at this time of the hour, and it is, of course—it’s not easy listening to some of the contributions coming from the other side of the House, but I feel like we’re sitting on 30 May 2024 and it’s a long, long day. It feels like 30 May is going to go down in the history of New Zealand politics as a dumping ground—as a dumping ground of waste, of toxic legislation that is causing an impact on our country that we haven’t seen before.

When I say it’s a dumping ground, it feels like it’s a dumping ground for legislation that they want to ram through and they want to dump in here, whether it’s the Taxation (Budget Measures) Bill, dumped here into urgency on 30 May; whether it’s the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill dumped here; whether it’s this legislation, the waste minimisation legislation, it’s been dumped; or the Land Transport (Clean Vehicle Standard) Amendment Bill, dumped here on 30 May; the Local Government (Water Services Preliminary Arrangements) Bill dumped here. Just like this legislation here around waste minimisation, it feels like a dumping ground where they can just cover over; where they can just come in and they can just run things loose, quick, and fast.

Now, this legislation, as the Hon Rachel Brooking, an exceptional member of Parliament, spoke about, is something that we support in principle, but—and there is a “but”—it seems to widen the criteria. It widens to a place that goes too far. It widens it to a place where it’s not actually about waste minimisation; it’s around clawing money from here, from the environmental space, which they cut during this week’s Budget, to put over here in terms of waste minimisation. When we look at this legislation and we look at the way it expands how and where the levy can be spent, I realise that it’s something that actually runs roughshod over what the legislation, what the purpose of it, was about. When we look at why they’re doing it, it’s because they need the money. It’s because they need to find the finance, because the finance Minister took away from the environment.

Reuben Davidson: Robbed it.

GLEN BENNETT: She robbed the environment. When we look at what happened in this week’s Budget, we look at cuts—

Laura Trask: Stick to the bill.

GLEN BENNETT: —to supposed back-office expenses—and this is all about the bill, and I’m sticking closely to the bill—because they are having to make cuts, and so, therefore, they’re looking for ways to recuperate a pittance, a small amount. So whether it’s the $22.3 million cuts to the Ministry for the Environment, whether it’s the cuts to waste minimisation—$52.97 million cut to waste minimisation. That’s why they have to take this legislation, they have to dump it here on 30 May 2024, because they need to find money and they need to find it fast, because—because—

Miles Anderson: We’re waiting.

GLEN BENNETT: Yeah, please wait, because it’s important, and sometimes pregnant pauses are moments to reflect and think about our environment.

Hon Andrew Bayly: Get back on track.

GLEN BENNETT: The Hon Andrew Bayly talks about getting back on track. Well, to me, it’s going backwards and it’s tracking into the ditch and the dump of wrecking our environment.

This was a good Act. This was something that was working hard with local government, working hard with Government, to ensure that waste minimisation was realised, that that 2040 ambition that the honourable Simon Court talked about is something that actually could be reached. But this is robbing Peter to pay Paul, and, of course, who suffers the most? It’s the New Zealand environment.

MIKE BUTTERICK (National—Wairarapa): This is a great bill that aligns with our aspirations to get great environmental outcomes. I commend it to the House.

LEMAUGA LYDIA SOSENE (Labour—Māngere): Thank you, Mr Speaker. I was just saying talofa—it’s still Samoan Language Week. You’ve heard our colleagues on this side who have provided a range of views with regards to the Waste Minimisation (Waste Disposal Levy) Amendment Bill. We won’t be supporting this bill, because, whilst we agree on some principles, it does broaden the criteria too far. I was quite lucky, just with my colleague Tangi Utikere, who also spent some time—over a decade—in local government. We worked really hard on the ground at that time to look with our communities at these matters of waste minimisation. In my local area, for those who are not aware, Māngere is one of the communities where we have a number of young people in our community who were very concerned at recent weather events.

I have read right through the supplementary analysis report which provides the context of which the Cabinet and the Government have made a number of decisions. One of my concerns—and it is outlined here—is that I’ve read on page 3 that the analysis and the modelling of this paper that has been presented of this legislation was done at pace, that communities have not been consulted, and what it tells me is that the modelling and the impacts have been quite rushed. So I’m very, very happy that we get the opportunity to speak right through this process, and question at the committee stage. But this bill really affects our lower socio-economic communities, and there are some really good initiatives that the previous Government supported, not just with the operational side but education. Why do many Kiwis or New Zealanders not utilise this programme under the waste minimisation?

You’ve heard the Hon Rachel Brooking in that we do agree on some of the principles but the broadening of the criteria, it just goes way too far.

Tangi Utikere: Too far.

LEMAUGA LYDIA SOSENE: Too far. One of the things for this community in my local community is that our young rangatahi, they want to be involved in waste minimisation programmes. Well, the cuts have been too severe, that we’ve heard yesterday. And programmes like Jobs for Nature, which were working really well in our local rohe in terms of young rangitahi that were not entering the workforce, those young people were entering programmes that were offered by the waste minimisation levy. So it is of real concern that when you are broadening criteria, what the Government is proposing for this waste disposal levy, that just goes too far.

So we bring it back to the context of when you are consulting with communities—those who are responsible for the supplementary analysis report—there is a critical voice that you don’t hear from, and it’s important that communities across Aotearoa, when the cutting of some of these programmes has happened, and they’ve happened at pace, how do you know that the problem definition has been identified? How do you know that the solutions that have been put forward under this current bill are the right choices that have been made by this Government? The whole waste minimisation programme is really, really important, because as we’ve seen, climate change is really affecting our communities across Aotearoa, and some communities are well-resourced and others are not. Education, under this programme, is really, really important.

Just as I complete my contribution this evening, what I want to stress is that there has to be a focus on what suits communities, and the only way you’re going to know for these types of programmes is that you have to speak to the community, whatever they look like. In local government, they need to be supported with the autonomy that as we speak to our young people right across Aotearoa, that their voices are involved in some of the opportunities in these programmes they offer, because they are the ones that will be standing here in 20 years’ time, making different decisions because today’s Government did not take that opportunity. So I just wanted to point this out, and I’m very pleased that I get another opportunity, and another opportunity just to raise some questions. So thank you for the opportunity.

Dr HAMISH CAMPBELL (National—Ilam): Thank you, Mr Speaker. It is with great pleasure that I rise to speak on the Waste Minimisation (Waste Disposal Levy) Amendment Bill. It’s great to talk about waste minimisation, because this is a Budget which is cleaning up the mess of the previous Government, so it’s very apt that we’re talking about waste management.

One of the previous contributions talked about the “c” word, but they didn’t use the “c” word which is “common sense”. I think it’s only common sense that we spend some of this levy and allow the ministry to undertake its functions and duties and exercise its powers in relation to waste management and to minimisation of hazardous substances. That’s just common sense, and some of the other measures that the money can be spent on, including repairing damage caused by emergency—it is why I think this is a great bill and I commend it to the House.

A party vote was called for on the question, That the Waste Minimisation (Waste Disposal Levy) Amendment Bill be now read a first time.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Bill read a first time.

SPEAKER: This bill is set down for committee stage immediately—sorry, for second reading immediately. Sorry, just helping the House; it’s a long weekend. I also note that we’re doing a waste minimisation bill, which might have made a good reason to move on. This bill is set down for second reading immediately.

Second Reading

Hon PENNY SIMMONDS (Minister for the Environment): Thank you, Mr Speaker. Wishful thinking from you! I want to thank members whose contributions have shown such a passion for waste minimisation, and this bill will help fund a more comprehensive set of Government—

SPEAKER: Just a minute. There’s a line here that I think you might have overstepped at this late hour.

Hon PENNY SIMMONDS: I move—

Tangi Utikere: Point of order. Thank you, Mr Speaker. Just seeking your guidance: there is a very strict interpretation in terms of process that members of the executive, specifically Ministers are required to—[Interruption]

SPEAKER: Sorry, can we just have no conversations going on while we’ve got a point of order.

Tangi Utikere: Thank you, sir. Just seeking your guidance: there is a very strict interpretation and expectation for members of the executive, particularly Ministers, when they are progressing a piece of legislation through the House. Those words were not used. So I seek your guidance about what the next steps would be in light of that.

SPEAKER: Well, if you had noticed, I had actually stopped the Minister’s speech and suggested that there was a line that needed to be stated at the start of that contribution. So you were following up on something that I’d already seen to, as it were. Thank you.

Hon PENNY SIMMONDS: My apologies, Mr Speaker. Thank you. I move, That the Waste Minimisation (Waste Disposal Levy) Amendment Bill be now read a second time.

This bill will help fund a more comprehensive set of Government waste and environmental priorities. These changes mean that, as well as waste minimisation activities, the levy revenue can also support projects to improve freshwater quality, remediate contaminated sites, and restore the health of important New Zealand ecosystems. Just a couple of examples of the types of projects that would benefit under the changes include the Kaipara Moana Remediation Programme, which supports landowners and communities to improve and restore the catchment; the Freshwater Improvement Fund, which will result in improvements to the health of waterways and catchments. Increases to the waste disposal levy will better reflect the true costs of using resources and disposing of waste, incentivise more reuse of materials, reduce greenhouse gas emissions from organic waste to landfill, and improve the onshore processing of materials.

We’re mindful of the cost of living, and the implications for households and businesses across New Zealand. However, we expect this to be relatively minor on them. The levy rate change from $60 per tonne—the levy rate that will be in effect from 1 July this year; up to $75 per tonne from 1 July 2027 for class 1 municipal landfills—will equate to an average increase in levy costs of around $5.07 per annum per household.

Central government will be able to provide more funding for the remediation of contaminated sites vulnerable to the effects of severe weather events, including closed landfills, before they become an issue. This will improve the resilience of communities. It will also help with the recovery and clean-up where it is needed. It is estimated there are hundreds of such historic landfill sites and other contaminated sites that are vulnerable around the country. The changes will significantly increase the amount of money available to support the remediation of vulnerable landfills each year. Councils will be able to request a levy waiver for any waste from the remediation of the contaminated site, ensuring this cost does not become a barrier to the cleaning up of such sites.

Government funding will also assist councils with the costs of cleaning up waste and repairing or replacing damaged waste infrastructure after an emergency event. This will ease the financial burden on councils and communities at a time they most need it. The Canterbury and Kaikōura earthquakes, our recent cyclones, and the Auckland Anniversary floods, and many other large-scale events have underscored the importance of resilient waste management and minimisation facilities and services across the region. To date, costs arising from managing waste caused by emergency events have been dealt with on an ad hoc basis.

Waste management is a critical service to get up and running quickly to reduce public health risks and support communities to get back on their feet. With these outcomes in mind, I therefore commend the Waste Minimisation (Waste Disposal Levy) Amendment Bill to the House.

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

Hon RACHEL BROOKING (Labour—Dunedin): Thank you, Mr Speaker. Now, of course, I’m reminding people that we are in urgency. They’ve just seen me not that long ago speaking on the first reading, and now here we are with the second reading. So I’m going to go through in some more detail about that issue of the nexus and the criteria—I think it’s critical that we are all understanding exactly what’s happening here.

Also, I want to respond to Dr Hamish Campbell’s comment, something about the previous Government making a mess. Now, I would contend, and I do contend very strongly, that the previous Government was doing excellent work in waste—though I would say that, I acknowledge. But there was a lot of work on the responsibility for reducing the waste Act to come, so that was really to have a whole lot of new tools to regulate in this space, particularly around product stewardship, to have some new tools, some more waste-tracking national standards and national licensing, and to help with moving and transitioning to a circular economy. Now, I am very hopeful that the Minister for the Environment will progress with that legislation because it was very useful.

In the lead-up to the different papers involved in the development of that responsibility for reducing waste, there was a lot of consultation about the waste levy, and waste issues in general. It was already raised to the attention of the Ministry for the Environment officials, of course, that the waste minimisation levy was too constrained in what it could be spent on. So that is why we’re agreeing that, yes, it should be extended out to some other issues that are related to waste, like old landfills. But it should not go to be the primary fund almost, or a total fund for anything that has to do with the environment that should be funded elsewhere—in the Budget, for example.

So this is, of course, an amendment Act to the Waste Minimisation Act, and that has these narrow criteria that Simon Court talked about earlier—that it’s got to be related to waste. So there’s an amendment here to the purpose, to “raise revenue to fund … (iii) activities that reduce environmental harm or increase environmental benefits;”. That is the width that we’re talking about, that is the expansion, and that is the phrase causing concern. There are other additions, including the promotion and achievement of waste minimisation—that’s good. Local authorities are to manage emergency waste and to repair or replace waste management and minimisation infrastructure damaged by an emergency—that also seems fairly sensible. Of course, it would be good to know what the industry thought about this, if there was a select committee process.

Also, the ministry is “to undertake its functions and duties and exercise its powers in relation to waste management and minimisation and hazardous substances.” There’s some discussion in the documents about what that means, but, in general, the extension to hazardous sites—that’s not an undue extension, either. Then, finally, “(v) projects that provide for the remediation of contaminated sites;”—again, we’ve been talking about the Fox River. So a lot of the expansions are sensible ones and there has, in part, been some consultation on those in the past—not explicitly, though. However, this general “activities that reduce environmental harm”—without any reference to waste, that just gets rid of the nexus completely.

I want to focus a little bit on the supplementary analysis report. It’s dated 15 May 2024. There is a bullet point right on the second page that does allude to activities that reduce environmental harm and/or increase environmental benefits. So that—to remind the House—is the wide clause that we have an issue with. It could be amended to refer to waste, and we’ll be talking about that in the committee of the whole House stage. That wide bullet point right at the top of page 2 is in the executive summary. But then, when you go further into the analysis, you look at paragraphs 93 to 110, you see there that there are little underlined sections, that there’s quite a lot of detail, some analysis, about these changes. So one of them is supporting remediation of contaminated sites, including closed landfills, and there’s a useful discussion. Another one is supporting emergency waste management activities. Again, there’s a useful discussion there. Then, underlined, there’s also one supporting more of the ministry’s waste and hazardous substances work programme. Those three underlined sections align with the changes that I just referred to in the purpose that seem OK. There might be some little fish-hooks in there that it would be good to have a select committee process about, but, in general, they seem OK.

There is no underlined discussion of this very wide “all environmental outcomes”—that is not included in this report, apart from in the executive summary and a little bit of scattering. The detailed analysis is not there. I presume there was some policy change that happened during the Cabinet process, but I’m worried that it’s a very cynical one. That was what my first reading speech was about, and my colleagues’ as well—that this is just a grab for some cash, and it’s a totally unwise extension of this hypothecated fund that should be addressing waste issues. Those waste issues do include the many old landfills that we have around our coastlines and near both our electorates—the Minister’s and mine. There are old landfills, as there are around the country, and we know that, with climate change, we will have more storm events and we know that there will be changes to how our rivers flow, and, potentially, sea-level rise as well. This will have impacts clearly related to waste—there is the nexus that I was talking about.

Some other issues with the bill are that these criteria that I’ve been talking about in the purpose—the ones that I like that relate to that contaminated land, the emergency situations, and increased compliance monitoring and enforcement-type work—only apply, with the way that the bill is written, to the money that central government is spending. That is, half of the pot of money is central government’s, and so this expansion of criteria only applies to that Government spending. It doesn’t extend to the local government spending, and that seems inconsistent. Local governments, we know, are the entities that have the old landfills in their districts, and they’re trying to deal with that contamination and remediation or capping of it or other various solutions to a problem. So I think it’s important that we understand from the Minister why it is that that local government criteria is not expanded, and I have Amendment Papers around that.

I would go back to this point, though. The idea of the bill not doing what we would like it to do, which is to extend it to other matters which have a nexus with waste, but to go further than that and rely on this fund for propping up various different environmental programmes, is very short-sighted. The idea that we can just cut all the money in terms of the environment and cut all the money in terms of what we’re doing in conservation is going to lead to long-term costs. We heard the Minister say that there’s different issues, and I heard climate mitigation mentioned. Well, climate mitigation can be done by instruments like the Climate Emergency Response Fund, which has been taken away by this Government, and we need to reduce our emissions. Purely for economic reasons, we need to reduce our emissions. We’ve signed up to a whole lot of agreements and we will end up having to pay a lot of money if we don’t actually reduce emissions.

So that’s very short-sighted. It is totally head in the sand to not be doing work on the environment. This Budget is good for ferrets and nothing else.

KAHURANGI CARTER (Green): Thank you, Mr Speaker. Well, it looks like I am the last speaker for the night, so I thought that I could talk a little bit about circular economies, and I know that you all love to learn things. So let’s talk about some of these finite resources that we’re talking about with this extractive, exploitive system that we currently have and why we need to be serious about waste minimisation in New Zealand. We need to be serious about investing in waste minimisation because the waste problem in this country is horrific. There is a major waste problem, and we need this Government to be serious about waste minimisation.

So, like I said in my first reading, the infrastructure for waste minimisation has a deficit of $2.4 billion over the next 10 years. That is outrageous when you’re thinking of taking money from the Waste Minimisation Fund, from this waste levy, and putting it into places that you’ve decided weren’t good enough to fund. These are things like clean rivers, because we know Kiwis care about clean rivers. We want our kids to be able to swim in those rivers and learn from the river. We care about community solutions and about people who have been doing this work for generations—the people who are on the ground, who are best placed to come up with these solutions and to deliver these solutions.

A few days ago, Minister Simmonds spoke at the waste minimisation conference and repeated the words “industry-led”. Now, this is what waste levies are about. The other side of the House wants to leave it up to industry, up to the biggest polluters, to do the right thing. Well, it’s actually our job, as the Government, to make sure that our biggest polluters are actually paying the price, because otherwise the people that are going to be paying the price are our future generations. This is absolute greenwashing at its finest. You are slashing funding for clean rivers, you are slashing funding for the Community Environment Fund, you are slashing funding for environmental action and climate action, and then you’re coming over and taking money from these waste levies. These waste levies are also—can I remind the other side of the House—less than half of what they are in New South Wales and in Victoria and in the UK.

So there is a lot of things going on here. Firstly, we need to increase the waste levy more because we have got a massive waste problem in this country. We need to be moving that towards about a $20 a year increase.

Hon Penny Simmonds: Cost of living crisis.

KAHURANGI CARTER: Well, industries actually aren’t feeling that cost of living crisis. So if we actually look at industry paying that extra and leaving households who are doing what they can with what they have—and our households are doing a good job because they do care about the future generations. They do care about waste minimisation. That’s why we saw the uptake in recycling. That’s why we see people repairing things. That’s why we see people wanting to know how to repair their things so that they’re not just having to send them to landfill, which is the current system we’ve got. Do you know the amazing thing about having a waste levy that actually—actually—invests in waste solutions like the Plastics Innovation Fund? But, oh, no, that’s gone too.

When we actually invest in our communities, the ones who are doing the work on the ground—now, I know that we didn’t get a chance to talk to community, but that’s OK because I did it for you. Today, I went and spoke to Para Kore. Para Kore are the only national, Māori-led organisation who work on waste minimisation in New Zealand. They work with over 800 organisations around New Zealand at the flaxroots to implement systems to reconnect and to deepen connection with Papatūānuku and Ranginui and to ensure that our future generations can breathe fresh air from our mountains, and they can swim in the moana and not be swimming in pollution.

So, with the help of Para Kore, the school in Māhia were growing their own food, working on food sovereignty, and then using that food for the Food in Schools project, and then, at the end of that, there was zero waste going to landfill. So that is how effective Para Kore is. But, unfortunately, because of decisions from the other side of the House, you’ve decided to actually slash and burn their funding. So those 800 organisations across Aotearoa who are learning about a te ao Māori world view of waste minimisation and living in harmony with gone.

Now, we’re talking about environment centres—so Environment Hubs Aotearoa—their funding has been slashed as well; environment hubs who became these amazing resources and sanctuaries in our climate emergencies. We saw them stepping up. We saw civil defence using those hubs as distribution centres because those hubs are known to the community. But what’s happening? We’re cutting—well, not “we’re”; you’re cutting that funding, as well. So I want to see local solutions. We want to see local solutions—

Andy Foster: Point of order, Mr Speaker. The point of order is that in the last debate we were having, this side was instructed very clearly to stick exactly to the bill. We are not hearing about the bill. We’re hearing quite a wide discussion there, but it’s not about the bill itself, and we were instructed to stick specifically to the bill. I don’t think the member there is doing that.

SPEAKER: Well, it is a second reading and I’m sure there are aspects of this—in fact, I know there are aspects of this—that were covered in that first reading. I’ve watched all the proceedings for the day. The member will carry on, but keep it as tight to the bill as you possibly can in the next minute and a half.

KAHURANGI CARTER: Sure thing—thank you. So Para Kore literally translates to “para” which is “waste” and “kore” which is “nothing”—to “zero waste”. Para Kore is about solutions for zero waste, but their funding is being cut, and this comes from the waste—

Simon Court: Because it doesn’t work.

KAHURANGI CARTER: Well, the 800 organisations that they work with who are growing food in schools and feeding the tamariki and having zero waste going to landfill—it’s incredible and inspiring, and I’m sorry that the other side isn’t ambitious and that they can’t see that vision for a better future for our tamariki. But we over here can. We can see a world where we live in harmony with nature. Now, EHA is the Environment Hubs Aotearoa. Like I said, they were havens in these climate emergencies, and their funding is being slashed as well. Then what’s happening is the biggest greenwashing that there is, which is that because you’re not funding the environmental initiatives and funding environmental and climate action, what you’re doing is you are not taking waste minimisation seriously.

So let’s talk about those finite resources. Basically, pretty much everything in here comes from five main resources. Those are bauxite, which makes our aluminium; it is iron, which is making our steel; it is the silica sand, which makes our glass; and it is our oil, which is making our plastic. The fifth one is trees—now, that is the only renewable resource out of all of those that we have. I don’t think you’re quite grasping that these resources are finite. We don’t have millions of years for them to come back into being. So once we use those resources up, they are gone, and it’s going to be up to our children and the future generations to be cleaning up our mess. I want us to live by that mantra of “Waste not, want not.”, because that’s what our kids deserve.

I want to make sure that those people who are on the ground—well, this Government talks about being about localism. Well, you are slashing funding for the communities who are on the ground doing this work and taking funding away from the people who are the most well placed to actually do this mahi because they understand their communities, like that school in Māhia, and like Roma Marae in the Far North, who have a food forest that will feed generations to come. That reduces our waste, because if you understand waste, you understand that there is so much embodied energy in anything we do. So when you are—

Simon Court: Kahurangi, come back tomorrow.

KAHURANGI CARTER: Oh, we’ve got 30 seconds to go. Well, let’s talk about some things that I want for my children and for my future generations. I want my children to live in a world where we treasure the precious finite resources that have been gifted to us by nature, instead of slashing and burning—slashing and burning—them. Then they can live with a legacy of abundance that they deserve, because that is what they deserve. Kia ora.

SPEAKER: The time has come for me to leave the Chair. The House will resume at 9 a.m.

Debate interrupted.

Sitting suspended from 12.03 a.m. to 9 a.m. (Saturday)

THURSDAY, 30 MAY 2024

(continued on Saturday, 1 June 2024)

Bills

Waste Minimisation (Waste Disposal Levy) Amendment Bill

Second Reading

Debate resumed.

SPEAKER: The House is resumed. We are on the Waste Minimisation (Waste Disposal Levy) Amendment Bill. We are on the fourth call, and I call Laura Trask.

LAURA TRASK (ACT): Thank you, Mr Speaker. I’m pretty excited to take a call on the Waste Minimisation (Waste Disposal Levy) Amendment Bill. A little bit of a story: my great friends Jodene Turner and Owen Conlon had a baby on 30 May—which happens to be the same day that we’re here; bit of a Groundhog Day—named Stevie Conlon. They live in place called Mandeville—and, Matt Doocey, you’re in the House; I’m pretty excited to see you. Why this is important is Mandeville’s in Waimakariri, really close to Christchurch. It’s on the “Waimak” River, and just up the road there’s a town called Oxford—

SPEAKER: This is all fascinating—

LAURA TRASK: It’s definitely about the bill.

SPEAKER: —but are you going to tell us now that they’ve decided to name the baby “Matthew”?

LAURA TRASK: No. They called the baby Stevie and she was a girl. So just down the road is Oxford, and if you know Oxford well—and Matt Doocey probably knows this issue—there’s a quarry there that they’ve been trying to convert into landfill for quite some time, with quite a lot of public opposition. It’s not yet consented, and we don’t know what that outcome will be. But this levy is really important because, you see, this quarry sits in a landscape buffer zone, so it’s on the side of some of really critical waterways that head straight back down the river and into the Kaiapoi area.

It’s a really important area, and this levy here will actually ensure that we have these environmental protections in place. So I stand by this bill, and I commend it to the House—and congratulations to the Conlons.

ANDY FOSTER (NZ First): It’s great to be here this morning. Look, listening carefully to the debate last night, it was very, very clear that there is strong agreement across the House about most of the bill. There is strong agreement around the ability to be able to use the levy for emergency management purposes. There is strong agreement around the issues around contaminated landfills and remediation of those. The only area of disagreement seems to be about whether the levy can be used for wider environmental projects. And I ask the other side of the House to think about that, because those are exactly the kinds of great projects that Kahurangi Carter was actually talking about—for those kinds of things to be able to be supported by the levy.

She also referred to over $2 billion in infrastructural deficits in 2020. I’d just like you to think about what the assumptions behind those numbers might be, what might be the quality of investment which is involved there, and what might be already funded. Just because there’s a deficit back then doesn’t mean it’s not been funded already and somebody’s going to go and do it. I think there is also a general agreement around increasing the levy, although I would note, for that side, that a lot of that will fall on the least well off, which seems to be in conflict with some of the other things that you’ve said over the last little while.

The last thing I wanted to say before sitting down is that I’d like particularly the Labour Party to remember the policy bonfire at the beginning of last year and what went on that policy bonfire. I have to say, at the time, I was very, very disappointed to see that there was a deferral of work on a container return scheme that would see small refunds for returning containers. That would have taken a lot of product out of the waste stream and got it reused. It is a shame that that was done, and I hope that’s something that comes back. But I would like the other side of the House to think about that so that they are not preaching from quite such a high pulpit at us. I commend this bill to the House.

SPEAKER: This is a split call. I call Tangi Utikere.

TANGI UTIKERE (Labour—Palmerston North): Good morning, Mr Speaker. Thank you. It does seem like Groundhog Day because I think last night at about 11.20 p.m., I followed Mr Foster on this bill, and I’ll do the same today.

You know, Mr Foster is right: there is some agreement around what this levy could be spent on. But the problem is we are progressing this bill through urgency. And this is the second reading, so, by now, usually in the normal scheme of things, this would have gone to a select committee, we would have heard from the community, and the select committee would have generally, for a matter of months, considered that bill, turned its mind to it, and provided a summary to the House as to what communities of interest—wherever they might be in Aotearoa New Zealand—might have to say about this bill, the changes, and the provisions therein.

So it’s disappointing that it’s been less than 12 hours since the first reading and we are now moving on to the second reading. The difficulty that I and members on this side of the House have is that members of the public have not had a chance to have their say. For a bill that talks about a 50:50 split between central government and local government, I think local communities around New Zealand would absolutely take up the opportunity, if given it, to share their views—well, I know they would—and tell us what it is that this money would go towards, what other opportunities it could go towards, and what other forms of innovation exist in communities.

Now, last night, just like others in this House, many of us took a call, and we alluded to our experience in local government. My colleague Lemauga Lydia Sosene, last night, talked about her experience in local government. For those of us that have sat around local decision-making tables, we know that when it comes to waste minimisation, you often hear from individuals who would otherwise not talk about, or share their views on, many things. Why? Because they’re passionate. They’re passionate about the environment; they’re passionate about the community. So for this Government to basically move straight to second reading without the opportunity for select committee process to take place is an indictment and really quite unfortunate.

I recall, actually, when we were in our city pulling together our waste minimisation plan, we heard about the difference of, yes, rubbish but also recycling. We did hear about compost, actually—that was mentioned in the House last night—and we heard about other innovative opportunities as well. Mr Foster and others have talked about the need for emergency works. Now, what my colleague the Hon Rachel Brooking has consistently said, over the last 12 hours, on this bill that we support the widening—well, we would support the widening of criteria. However, what is proposed goes far too far, and if we don’t allow the public to have a say on this, that makes it even more confusing and more difficult, I would suggest.

Last night, we talked about the distinction between the levy and the tax. This is a levy that is directed specifically—whether it’s a 50:50 split or some other differential between the central and local government split—and targeted for waste minimisation, in this context, particularly around waste disposal. So when I look at the bill—and no doubt we’ll have plenty of time to explore this when we go through committee stage, and I know there are a number of Amendment Papers that we’ll turn our minds to around that—this is a bill that proposes to widen the scope of additional matters that would be funded. I’m looking at the list here. The first is around environmental harm reduction or what would increase environmental benefits, and that would be something that the Secretary for the Environment would effectively be entitled or empowered to spend revenue that’s generated from this levy on.

The waste-related emergency spending—we don’t deny on this side of the House that there needs to be a provision for emergency works. The question is, where does that appropriately sit, and without having an opportunity to hear from people and without having an opportunity on this side of the House to engage directly with the very advisers and officials that would work with select committees at this point in time, it is very difficult to have a fulsome understanding on behalf of the community as to what that might look like.

Of course, a further bullet point is around the funding for the ministry, which would require it to undertake the various duties that it would have. Now, clearly, the duties would be expanded as a result of this, and I look forward to hearing from the Minister in the committee of the whole House around that and what that might look like. But, fundamentally, we are at second reading. Our colleague Kahurangi Carter, last night, talked about the $2.4 billion infrastructure deficit. This here does not seek to tackle that, and without public input, it is very difficult to support, but we’ll see what the committee stage might bring.

STEVE ABEL (Green): Kia ora, Mr Speaker. Mōrena, Aotearoa New Zealand. It’s Saturday morning, and you’d like to be watching your kids playing football, because we are human beings; we’re not just ciphers for capitalist annihilation, but this crackhead coal-ition Government smashing through—[Interruption] That’s right, that’s right. You said it. You named yourselves the coalition Government. They are wanting to—

Simon Court: Point of order, Mr Speaker. Point of order. Point of order. Mr Speaker—

SPEAKER: I heard the comment.

Simon Court: Yeah, I think the comment is unhelpful to maintaining order in the House at this time in the morning.

SPEAKER: It was, and I’ve had discussions about this very matter with whips at the Business Committee, so I would ask the member to reconsider the use of that term in the House. It’s unacceptable to make blanket allegations against other parties. Carry on.

STEVE ABEL: Thank you, Mr Speaker, I’m presuming I can call them the coal‑ition Government, though? That’s OK? Yeah. Because, you know, they’re barking “coal” from the other side of the House, proudly, all the time. That is relevant to this bill because whilst we may be wasting our time and wasting nature and indeed—

Tanya Unkovich: It’s called democracy!

STEVE ABEL: —wasting democracy, that’s right. We are wasting democracy because the public don’t get a say on this, but this Government listens intently to its lobbyists. One of the interesting cook-arounds on this particular piece of legislation—one of these interesting factors here—is that they’ve been listening well to the big-polluting lobbyists. So, yes, as my colleagues to that side of me—on the left side of the House, but on the right side of me—point out, rightly, we need a waste levy. A waste levy is a good thing—that is broadly supported—but it should be a waste levy.

When the Minister says that it’s for improving and protecting the environment from harm, in fact, what this Government is doing is removing tens of millions of dollars in this Budget that are there for protecting the environment from harm. Protecting the environment from harm is not remediating previous harms or existing harms, and this waste levy that people are paying to reduce waste—they say it’s for waste minimisation—is, in fact, going to be used for cleaning up the mining industry’s mess.

It says here that it’s for decontaminating mining and industrial sites. That is not what a waste levy is for. If we are to accumulate the necessary funds that we need to rightly build the infrastructure to deal with waste, which is a cost burden to our society and to our environment, we should be putting that money towards reducing waste, not to cleaning up contaminated industrial sites. But, of course, what the very effective lobbyists from the mining industry say to this Government and whisper in their ears—and this Government does listen intently to its lobbyists—is, “You can spend that money that people think they’re spending on cleaning up waste. You can spend it on cleaning up our mining mess that we left behind, our acid mine drainage, and our massive cyanide-laden tailings dams in Waihi. And when an extreme weather event causes that tailings dam to fail, you can take money from the waste levy to clean that up.”

Absolutely we should be cleaning up contaminated mine sites. Absolutely we should be cleaning them up, but we should be making the industry most closely associated with that mess pay for it, not the construction industry. So when someone dumps their landfill and they’re going to get charged more for the levy, they’re thinking, “Why am I paying more for this?”, and the response is, “Because we’re trying to reduce waste. Oh, but also, we’re actually going to use the money you’ve just paid on that levy to clean up the coal industry’s mess.” That’s actually what this legislation now does.

This is why broadening it beyond waste minimisation is not what this is for. This is why broadening it as it does is, frankly—I’m not allowed to say the word that I want to say.

Simon Court: It’s a great idea, Steve. These are orphan sites.

STEVE ABEL: Orphan sites of the industry that created that mess, the legacy industry—are you telling me the construction industry should be playing to clean up the mess of the mining industry? No. Why doesn’t the mining industry have a levy to pay for cleaning up of orphan sites?

Simon Court: Well, why should good operators pay for bad operators?

STEVE ABEL: Exactly, that’s what it should be. It should not be coming out of the waste minimisation levy. I actually wonder what the legality is of saying it’s a “waste minimisation levy” and then spending it on something other than waste minimisation, because that’s, frankly, not saying what it says on the tin, and that’s not what the public of New Zealand—they’re trying to watch their kids play football and sitting there on the phone going, “What? What’s going on here?”, and the Government is saying, “You don’t get a say on this, by the way.” I think the construction industry would have loved a select committee on this. They could have given their opinion on how good they feel about your using their money for cleaning up mining industry waste.

It is not protecting the environment to clean up a mess made by an industry from which this Government is removing all the protections for the environment, including water catchment—I’ll get back to that. Thank you, Mr Speaker.

Hon SCOTT SIMPSON (National—Coromandel): What a surreal world we live in when we hear Green Party members arguing against investment and prudent action in terms of the environment. It’s a surreal world. This is a very practical, pragmatic piece of legislation, and I support it and commend it to the House.

GLEN BENNETT (Labour): This morning, most New Zealanders are waking up to the first day of winter, but in this House, we’re sitting in the cold darkness of 30 May. [Interruption]

SPEAKER: Sorry, we’ll recalibrate the member’s time. Just keep it calm, for goodness’ sake. It is Saturday morning, and I know that people are short of sleep and, for whatever reason, quite excited about being here, but contain your thoughts and wait for the committee stage where you can all have a say, if wanted. Glen Bennett, start again.

GLEN BENNETT: Mr Speaker, thank you. It is nice to see the robust debate taking place here in the House today. But as I said, for the majority of Aotearoa it’s 1 June—it’s winter—but in here—

Hon Rachel Brooking: Not in Dunedin—20 degrees.

GLEN BENNETT: It’s 20 degrees in Dunedin, the Hon Rachel Brooking says. But she’d rather be here. She doesn’t want to be in her electorate today; she wants to be here, supporting the environment and supporting initiatives to make sure we protect our precious nature—that we only have one left of—all of nature. As the Hon Rachel Brooking mentioned in the first and second reading of this bill, there are parts of this that we do support. And we’ve been looking at it very closely, and, obviously, waste minimisation and the disposal of waste is important.

Now, I live in New Plymouth. In fact, my community of Marfell sits right next to an old dump site that they turned into a park. But that park can’t be used because of what was dumped there many, many years ago. And a lot of people in this House will know when it comes to what this bill is trying to achieve and what it does is around how we remediate some of those old landfills—and it’s really obvious and really clear for me and my community, as we sit and surround what seems like a beautiful park, that once upon a time soccer was played on it, once upon a time there was BMXing, and once upon there was rugby as well, but none of those things are able to be done any more. In fact, none of those things have been done for probably more than 25 years because of the issue of what is under this beautiful looking, pristine park, and the issues—people fell and had parts of their body infected because of what was under there.

Now, we know, and lots of people in this House will know, about the Dow AgroSciences plant in New Plymouth. Again, they created some pretty awful chemicals and toxins, and some of those were buried in Marfell Park. So back in 2009, and I was there—and it came to the attention of the Taranaki Regional Council and the New Plymouth District Council that there were real issues with some of the chemicals that had been buried there many, many years ago, and one of the issues was bleaching. So this bill had only, I believe, just come into Royal assent in 2008, and this was 2009. And I know the regional council and district council spent up to $27,000, and then Dow AgroSciences put in another $50,000 to try to remove these chemicals and deal with it. I think, when I go back to the electorate of New Plymouth on Monday or Tuesday or Wednesday next week—whenever we get there—I will be sort of checking in around what this looks like and what this bill does.

The thing that we don’t support is—it feels like it is an overreach. It feels like it isn’t targeted as much as it has been, and it’s been working. So when we look at what they’re trying to achieve, they’re wanting to broaden the criteria to many environmental issues and problems. And, as we know, that comes back to the point around the Budget and, in fact, how little there was in the Budget for the environment. So they’re having to find somewhere and some way of finding some money and support to ensure that they can fund initiatives to help protect our environment.

Now, none of us—well, I hope that none of us—want waste, and I hope that those in this House are conscious consumers when they go to the supermarket or when they go and buy a new fridge or vehicle or whatever it is, because when I look at Marfell Park and the issues of the old landfill that sits there as an eyesore within our own community—200 cubic metres of soil were taken away with contaminants in, but we know there’s far more. So when I go back to New Plymouth, I’m going to be looking at this work and what we can actually do to work again with regional council and with the local district council to ensure that the people of Marfell have what they deserve—they have a decent park, they have a decent playing ground, they have a decent place for the kids to play and for sports activities to happen and for people to walk their dogs.

And looking at this—and they widen the clauses—I just think we need to be cautious and careful. In the committee stage, I know that the Hon Rachel Brooking has some really thoughtful amendments that she’ll be putting on the Table—some really thoughtful amendments—to actually support the Government in terms of what they are trying to achieve, because we want to be constructive. We want to make sure that we get it right for nature—that we get it right for nature.

And when we look around the country and we look at what’s going on in a lot of sites with climate change and with the challenges, I know there’s a number of dump sites that were close to the ocean. And with the seabed, as some of those areas are reclaimed by the ocean, we see the issues that come with those dumps getting out into the environment. So we want to find ways to move this forward. We want to find ways to ask the Government and work with Government to say, “Hey, look, this is a waste disposal levy—that is it. That is the parameter, and we’re not going to stray either way from that.”

Now, Andy Foster spoke before, and he spoke about needing to think about the expansion: “Come on, let’s get on with it, and why not widen it? Come on, let’s just do that.” But I just think, and I come back to my point, this needs to be targeted; this needs to be tight. I believe you said, “Think about the expansion of how the levy can be spent.”, Mr Foster, and I think that’s what we are thinking about and we’re working on, and we’ll make sure that we do.

Now, when you look at the Ministry for the Environment and the offer of voluntary redundancies, when you look at the Public Service and the hundreds of jobs that are going in terms of jobs related to the environment, we are going to need to fight really hard, and we’re going to need to work really hard to make sure that something like this doesn’t just become this big, open piece of work where the levy that is taken doesn’t just end up going here, there, and everywhere, and it misses the challenge of cleaning up Marfell Park. It misses the challenge of making sure, where there have been dumping sites and there have been other chemicals buried in places, that they don’t get forgotten and left out, because we’re spending money over here for the environment, which we, of course, support. We want to spend more money on the environment. We would love the Government to reconsider their Budget. We would love the Government to reconsider their cuts. We would love the Government to make choices about how better they protect our environment and how they protect nature and how they protect our climate. But we’re here—we’re here. We’re looking at this legislation, and we’re trying to figure out how we can make it better.

I want to just take a moment to have a look at the supplementary analysis report. And it does talk in here about the Government’s decision and priorities that are relevant to this proposal. And it goes on to say, “The Government’s priorities include a number of areas that require proactive action to prevent significant environmental harm and/or manage cost pressures.” And it all talks about the cost pressures and the need to claw back money in the levy. It talks about addressing environmental harm associated with closed landfills. In addition to this, it talks about supporting the identification and remediation of all types of contaminated sites.

It also goes on to talk about supporting waste management costs associated with emergency events, such as storms and earthquakes. And, as you would know, Mr Speaker—you went through the experience and disaster of the Christchurch earthquakes—there is a need for the legislation to be right to ensure that the amount of waste that had to be put somewhere, and there needs for there to be good processes in place to make sure that waste is disposed of in a safe way. We look at last year, and we look at the Auckland floods. We look at the East Coast and the storms over there, and we look around New Zealand at what’s been going on in recent years. And we know that when there is such destruction and when there is such waste, we need to find ways to make sure (1) we have the costs in place to ensure that we can dispose of it correctly but also that we make sure that legislation is set so it isn’t so wide that, sadly, when there is another Kaikōura earthquake, or, sadly, when there is another Cyclone Gabrielle, or when, sadly, there is another Auckland floods, we have a tight piece of legislation and we have tight rules around how levies will be spent to ensure that we get it right.

So we’re really looking forward to the committee stage and looking forward to offering ideas to support the Minister to ensure that she can make this bill a lot better.

MIKE BUTTERICK (National—Wairarapa): Good morning, Mr Speaker. We’re all bright-eyed and bushy-tailed on this side of the House today, and we’re very excited about getting the environment and the country back on track. It’s a great bill. I commend it to the House.

SPEAKER: This is a split call. I call on Reuben Davidson.

REUBEN DAVIDSON (Labour—Christchurch East): Thank you, Mr Speaker, and tōfā for Samoan Language Week, and I’ll explain why it’s tōfā shortly. But it is my absolute pleasure to take a call on the Waste Minimisation (Waste Disposal Levy) Amendment Bill. I said “tōfā” partly because it’s Samoan Language Week but also because tōfā means goodbye—goodbye to responsible environmental policy, practice, and funding, and that’s what the waste minimisation bill does. I would also like to say, before I go further, tālofa to those celebrating Samoan Independence Day at the beautiful Christchurch Town Hall this morning—a stunning building, a jewel in the Crown for Christchurch.

Now, it’s a long Thursday, it’s a very long Thursday, and someone said to me this morning as I was getting my coffee, “Gee, you must be getting tired.” I said, “No. We’re just getting started.” We are just getting started, and that is why it is such a pleasure to start this part of Thursday talking about the Waste Minimisation (Waste Disposal Levy) Amendment Bill. The three things that I think it’s important we come back to, about what this bill sets out to do, are: activities that reduce environmental harm or increase environmental benefits, waste-related emergency spending, and—this is the really crucial one—funding the Ministry for the Environment to undertake its functions and duties and exercise its powers in relation to waste management and minimisation and hazardous substances. Well drafted, ill intentioned. It’s a money grab to make up for what we have seen, and what we have seen is ruthless cuts to responsible environmental funding.

I’d like to give you an example of a school in Christchurch that I went to that was built on the site of a former landfill. It was a contained landfill beside a river, because back in the day, we always thought it was great to put landfills beside rivers and beside the sea in low-lying coastal areas, because nothing was ever going to change, right? That site became one of the 10 most toxic sites in New Zealand, and it was home to a school. It had very high levels of lead and arsenic, and it took hundreds of thousands of dollars to remediate that site so that it became a safe site to have a school on.

This is not an isolated issue to parts of Christchurch or parts of the South Island or parts of the North Island. This is a New Zealand - wide issue, and if we broaden the scope of this bill, we rob communities and schools of the ability to access the funding that they need to remediate their land. The hypothecation of the funds drawn by this bill, and the broadening of that, literally robs communities and robs schools of creating safe environments to live, work, and play in, and that is definitely not a good thing.

Some people have suggested that the broadening of this scope actually turns it into a fast-track clean-up fund, a resource that’s available to tidy up some of the messes that might be created by things like new mines, by irresponsible, reckless environmental activity in places where we shouldn’t be carrying out that kind of activity. I think there’s a real risk that the huge cost that will be required to remediate damage done through that activity will take everything out of the waste minimisation fund and take away its intent, take away its ability to do what it was set up to do.

So I cannot commend this bill to the House, I cannot commend a weakening of the funds available to remediate sites, and I cannot commend what in real terms is a cut to responsible environmental practice.

Dr HAMISH CAMPBELL (National—Ilam): Thank you, Mr Speaker, and good morning. It’s great to be speaking on the Waste Minimisation (Waste Disposal Levy) Amendment Bill. After all that rubbish we’ve just heard from the previous member, Reuben Davidson, it’s quite ironic that we’re talking about waste minimisation. I think most people watching from home can’t believe that the Opposition would actually argue against spending on environmental projects and outcomes, and I use that word “outcomes” very specifically because that’s what we’re going to be doing. I commend this bill to the House.

LEMAUGA LYDIA SOSENE (Labour—Māngere): Thank you, Mr Speaker. It is a real pleasure to take a call on the Waste Minimisation (Waste Disposal Levy) Amendment Bill. On this side of the House, we’ve had contributions made by our colleague, the Hon Rachel Brooking, who has highlighted why we agree with some of what has been proposed by this Government. However, it is far too broad.

Part of the summary of initiatives that has been outlined—it has been very interesting, because we are not going through a select committee process, so the public does not get the opportunity to raise questions, to raise concerns, and to really scrutinise what is before Aotearoa at this point.

On this side of the House, I want to explain, in my contribution, why we are opposed to this levy that has been hypothecated to be expanded, because if you expand it too much, you lose the focus of the waste-related and environmental activities that are really important. They are important issues to our community. We have a lot of young people, a lot of rangatahi, that are very concerned that this specific levy that will be for communities and industries up and down the country—it is really important to have that specific focus.

One of the things that I want to raise is the education on environmental activities. So I’m just going to highlight some of the activities that the levy was helping under this legislation introduced in 2008. Waste minimisation is part and parcel of a movement. We New Zealanders have to be (a) educated, and (b) have strong legislation to guide communities and to guide industry as to why we are going to look after Aotearoa. In terms of the activity, we all have a responsibility to make sure that the whenua that we live in, that we use every day—it is important that people get to have their say.

When I read through the supplementary analysis report, I appreciate what has been highlighted under the Waste Minimisation Act 2008. It’s really important that we have a focus on emissions from the remediation of contaminated sites. In my local rohe in South Auckland, in Māngere, because of activity that has been taken by early gardeners, there has been a lot of contaminated soil that has been produced over time—but also by the big housing developments. And there has been a lot of work by Auckland Council in the local communities. Last year, with the Auckland floods, the community, like other communities, was up in arms that the remedial activity that had been taken by Auckland Council was not enough. It just wasn’t enough, and communities suffered a lot of harm in terms of losing everything that they’d had.

I want to specifically focus on communities that have English as their second language—specifically for te reo, specifically for Pasifika, and even ethnic communities—where they understand that legislation is there because previous Governments have put that in. However, they don’t understand completely the relationship of the legislation to Auckland Council and to some of the activity. So some of our communities really suffered and lost everything.

So I come back to the bill. If the funding is going to be too broad, how then will communities like ours be able to participate and be able to be educated about the environmental harm that will come our way? The impacts are not good when you’re cutting funding from the environmental activities.

I really look forward to the committee of the whole House stage, so that we are able, as members on the ground in our local communities, to ask the Minister specifically about her understanding about analysis and the modelling and specifically impacts, because if you don’t have the opportunity to have really good stakeholder consultation when you are producing legislation that the Government is so strongly focused on, then that leaves out communities who could have benefited from well-written, well-traversed legislation.

I want to highlight a local situation in my local community that members will not be aware of. There was a particular policy by Auckland Council to do with drains—drains that are on everybody’s road where the water just goes down the drains. We had a problem in our local community where one of our young rangatahi—and I know members are all looking at their phones because they don’t want to listen—died in a drain because the drain was open. The lid of that specific drain was able to be lifted.

I roll back to the legislation. It is important for the public to have their say so that members that are sitting around the table on that specific select committee or members of the Government of the day understand the different situations that occur if you don’t have good environmental objectives and if you don’t have a clear process where the community can come along and provide views of the different situations in their local communities.

On this side of the House, we are opposed. We are opposed to the definitions or the wider range being expanded, because you need to have a specific focus, and it needs to be clear to the public why good legislation that is put in by the Government of the day then goes to the territorial local authorities so that, then, communities can understand what these effects are and they could change their behaviour to help with understanding environmental harm in local communities.

So what I can say in terms of the modelling that I understood, the information that has been provided in the analysis report, is that it just does not go far enough, and broadening the purposes of the levy, where it is supposed to be spent, diminishes that link. It diminishes the link between those paying the levy and the outcomes—the specific outcomes—that are being funded by this levy.

I cannot emphasise enough the importance of having very good environmental education, because that explains to communities the cause and effect. It also helps communities on the ground, in terms of the levy that is being proposed, so that people understand the intent behind the policy and they can understand the problem that we are all trying to diagnose.

In terms of the investment of this levy, there are contaminated sites that require remediation up and down the country. For specific councils, like Auckland Council, there was a specific focus on communities, especially the communities that cannot afford some of the costs. This Government has made their announcement—in terms of the Budget, there are just cuts everywhere. People are trying to manage their households, and so their focus is not on environmental initiatives, not if they’re trying to get ahead, not if they’re worried about school lunches, not if they’re worried about their children getting to school and the increased cost of public transport.

So I come back to this bill that is being proposed today, and we absolutely oppose the broadening of the new legislation, because it is important that the future of our rangatahi is really clear on environmental harm. It may influence the change of their behaviour, to choose better careers or a better education, because they understand the actual problem. So I’m very pleased that I’ve been able to take a call on this matter. Thank you.

KATIE NIMON (National—Napier): Look, I don’t want to waste any more time, so I’m going to minimise my contribution and commend this bill to the House.

A party vote was called for on the question, That the Waste Minimisation (Waste Disposal Levy) Amendment Bill be now read a second time.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Bill read a second time.

SPEAKER: This bill is set down for committee immediately. I declare the House in committee for consideration of the Waste Minimisation (Waste Disposal Levy) Amendment Bill. Thank you.

In Committee

Part 1 Amendments to principal Act

CHAIRPERSON (Maureen Pugh): Members, we are in committee on the Waste Minimisation (Waste Disposal Levy) Amendment Bill, and we are starting with Part 1, which is the debate on clauses 4 to 12—amendments to the principal Act—and Schedule 1. The question is that Part 1 stand part.

STUART SMITH (National—Kaikōura): Point of order, Madam Chair. I seek leave for all provisions to be taken as one question.

CHAIRPERSON (Maureen Pugh): Leave is sought. Is there any objection? There is.

Hon RACHEL BROOKING (Labour—Dunedin): Thank you, Madam Chair. I’m standing here and, hopefully, you and the Minister can see me. I’m just looking for the Minister’s indication, because I do have a series of questions on most of the clauses in Part 1, and I think it would be simpler if I go clause by clause and we have a good discussion process with the Minister. I think there was a nod there. There is a nod—excellent. So I won’t be taking full calls, but I would like to ask the Minister a number of questions because, of course, this is not going to select committee and this is our opportunity to get on the Hansard what is meant and what is not meant by this bill.

Starting then at clause 4, which is amendments to the principal Act: if we go to the principal Act, the purpose is confined—sorry, I’ll just flick on to this—at section 3 of the Act. The purpose is “to encourage waste minimisation and a decrease in waste disposal in order to—(a) protect the environment from harm; and (b) provide environmental, social, economic, and cultural benefits.” Then there is another purpose in Part 3 of the Act, and Part 3 is the waste disposal levy. So at section 25, there is a purpose of that Part 3, and that is “to enable a levy to be imposed on waste disposed of to—(a) raise revenue for promoting and achieving waste minimisation; and (b) increase the cost of waste disposal to recognise that disposal imposes costs on the environment, society, and the economy.”

So what we have here in clause 4 is that the purpose of Part 3 that I just read out is included in the overall purpose section. That seems fine, and I’m not asking any questions on that, except that the Minister can confirm that I’ve not got anything wrong there. That raising revenue part of the purpose is “the promotion and achievement of waste minimisation;”, and then there’s a number of other clauses.

I’m going to come back to subparagraph (ii), but there’s subparagraph (iii), which is to do with “local authorities to manage emergency waste”. I do have a question on this that relates to some other clauses as well, and the question on the local authorities is for the Minister to clarify that this purpose section and subsequent sections only really relate to the Government half of the levy. The broadening of the purpose doesn’t apply to how the local authorities can spend their money that they collect through the levy; it only applies to the money that they spend via the central government’s collection of the levy. I have no problems with this emergency waste addition at new subparagraph (iii).

Then at subparagraph (iv), it’s that the ministry can undertake functions and duties in relation to waste minimisation and hazardous substances. I just have a very small question on this, and it’s just around the grammar. So it’s “in relation to waste management and minimisation and hazardous substances;”. Do those hazardous substances have to relate to waste management and minimisation? Should there be—if you listen to Chris Finlayson or not—another comma in there? A small point, but one that I’m sure the officials can help with.

Then at subparagraph (v): “projects that provide for the remediation of contaminated sites;”. A small question on this point is around what’s happened to that contamination fund—the separate fund that didn’t come through the levy. That’s the second question.

Then at paragraph (b): increase the cost of the waste disposal levy. That’s unchanged from what we’ve got in the Act at the moment.

Going back, then, to subparagraph (ii), that is “activities that reduce environmental harm or increase environmental benefits;”. I might just pause here and come back to it if the Minister is agreeable, so that she can answer my grammatical question on subparagraph (iv) and if there are any comments on subparagraph (iii) about local authorities and that connection to emergencies being through the central fund, and that I’ve described the purposes appropriately.

Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Madam Chair. I’ve just got two related but, I think, quite narrow questions. Obviously, the crux of our opposition to this bill is in clause 4 there—the fact that the fund can be used on activities that reduce environmental harm or increase environmental benefits—this general purpose, which doesn’t have any link to waste. My question is really quite precise: given the purpose of the waste minimisation bill overall, is it the Minister’s intention that when those funds are spent, there will be some connection with waste in some way? I’ve read the disclosure statement and the analysis that the department’s done, and it seems in that analysis that there is expected to be at least some connection with perhaps an adverse reaction as a result of waste, or a mitigation as a result of waste, but perhaps not quite as constrained as in the other parts of that clause.

If the answer to that is no, then I guess my question then is: did the Minister talk to the Minister for Regulation about that? Because a charge which is able to be used for general purposes not connected with the activity levied is actually a tax, because it goes for a more general purpose of Government, and that cuts right across principles of good regulation and good lawmaking. The Legislation Design and Advisory Committee, in chapter 17 of its guidance, makes very clear the distinction between a fee, where you pay for a service; a levy, where you pay an amount related usually to an industry or a general regulation of activity, like ACC levies or producer board levies or things like that, where there is a direct connection between what’s going on and what the money is spent on; and a tax, where you take money off citizens in one way or another and you can then just spend it in a way which is unrelated to the activity which generated that revenue.

Now, I know the Minister for Regulation is keen on good regulatory design—he’s just getting funded for his bizarre new ministry, his vanity project—but I’m hopeful that you’ve had a conversation with him and that he has reviewed this. Because I am concerned that it—and the document talks about needing to find more money to pay for stuff, and that’s fine, in the waste space. I can absolutely accept that, in the waste space. My friend Glen Bennett talked about contamination and historical problems, and I can understand the need to look at ways to minimise waste, new recycling, the kind of regulation there. But the sort of general “let’s save the whitebait” or the kiwi or the kākā or whatever it might be—there just doesn’t seem to be any causal connection. But it does fit within the general and generic environment.

Now, on this side of the House, we absolutely support protecting the environment and we support the proper use of Government funds to do that, and that fund has to come from the public. But to have a waste minimisation fund—and we accept that, a little, we can expand that and talk about a bit more than just waste minimisation; it’s waste management as well and mitigation of waste harm. That’s what this bill should be doing. But a generic extension to anything to do with the environment seems to be an overreach. So is that overreach real, or will there be, because it sits within this principal Act, a necessary connection between waste and expenditure? And if not, was the Minister for Regulation savvy to the imposition of what appears therefore to be a tax?

Hon PENNY SIMMONDS (Minister for the Environment): Thank you, Madam Chair. I will answer the questions that have come through from the Hon Rachel Brooking. First of all, she is correct that the purpose of clause 4 amending section 3 of the principal Act is relating only to Government levy proportion, not to the local authority 50 percent. With regard to the comma and whether other intentions were there with the hazardous substances: no, the responsibilities extend to the Hazardous Substances and New Organisms Act.

I just also want to touch on the points that both the Hon Rachel Brooking spoke to and also the Hon Duncan Webb in terms of the broadening out of the waste levy. Of course, use of resources is a whole of lifespan of those resources. There are many impacts on the environment through from the extraction point through to the use and manufacturing and then final disposal, and therefore the ability to put a levy on at that disposal end gives that flexibility to be able to address some of the environmental impacts that occur through the lifetime of that product. So the waste levy still will be a levy. Widening the purposes of how the levy can be spent still retains that link to the various environmental impacts that go on through the life cycle of a product.

Just to give further reassurance, I can point the members to South Australia and New South Wales, and also examples in Ireland where, in fact, they recognise exactly this and use their waste disposal levy for wider environmental impact and issues, because of that very notion of that whole-of-life cycle from extraction through to disposal.

STEVE ABEL (Green): Thank you very much, Madam Chair. I would like to ask the Minister for the Environment about this expansion of the scope of the use of the waste levy, which includes former mining and industrial sites. This is a very important piece of work that we absolutely agree has to be done. It’s essential that we work out how to decontaminate those sites. Our position, I think, is that it shouldn’t come out of a waste levy. But my question is: what is the shortfall in terms of the moneys necessary to properly deal with those contaminated mining and industrial sites? What is the shortfall that is trying to be met there? If we understand the dollar value of that, we begin to understand how much of the waste levy will be used for doing things other than dealing with waste.

The other thing I want to ask about is that there is a problem with the allocation of this money to cleaning up not just historic sites—there’s no mention of it being for only historic contamination—it also says that it will be used for catchment remediation: “works and funding to support the management of New Zealand lakes, rivers, streams, groundwater, and wetlands.” Now, that is good work. We support that work. But catchment remediation may include mitigating the impacts from contaminants that are coming from an active industry right now, the obvious one being nitrate contamination from dairy cow urine, which is turning rural people’s drinking water carcinogenic. It’s possible, through this wording and the definition of contaminants in section 5, that this money from the waste levy could be used to clean up the mess created by a billion-dollar industry that is operating right now in New Zealand, and the obvious question the public would have is: why are you charging me for waste minimisation and then using that money to clean up a mess made by the dairy industry, or made by the coalmining industry? That’s my question to the Minister.

There’s an obvious solution here to this broadening of the definition. It’s simply to add in an amendment. In clause 4, we replace section 3(2)(a)(ii), on page 2, with the words “activities relating to waste that reduce environmental harm or increase environmental benefits”. That is a proposed and tabled amendment so that, rather than being simply activities that reduce environmental harm or increase environmental benefits, we make sure that it’s activities relating to waste. I want to say that we support a waste levy—it is a good thing—but, for us to grow the pool of money necessary to deal with reducing our waste, it needs to be spent on that; it needs to be spent on waste. No argument with the need to decontaminate sites, no argument with the need to remediate water, but the industries more closely associated with the harms caused by contamination of water or mining waste should be paying for the cost of that, not the public and not the construction industry, for example.

I would like to ask the Minister how logically, or in principle, do you think it is fair that the construction industry should be paying for cleaning up mass acid mine drainage from the coal industry. How is that, in the mind of the Minister, a fair allocation of the levy, which, as my colleague points out, once it’s so broad that it’s not doing what it says on the tin, is a tax. It’s a broad tax on the public, including those of us who put our rubbish at the front gate. It’s a broad tax on the public to pay for cleaning up the mess of industries that are wealthy enough to be made to pay to clean up their own mess. Thank you.

Hon PENNY SIMMONDS (Minister for the Environment): Thank you, Madam Chair. I’ll respond to the member’s questions. Of course, the member will know that there are a number of historical contaminated and vulnerable sites right across the country. The ministry is working closely with local authorities in terms of ensuring there is an assessment tool to be able to prioritise those sites so that we can certainly work through them together—local authority and central government working through them together—and this levy will, of course, provide the opportunities for central government to assist with that, particularly around the ability to waive the levy fee.

I know that one of the small South Island local authorities noted to me recently that this remediation work that they were intending to do in two of their sites—around a tenth of the cost was actually the levy. So it will certainly enable the central government proportion of the levy to be used, but also the ability to waive the levy fees from the local authority and so reduce some of that burden on the local authorities for it. But we are definitely talking about a large number of these sites right across the country.

With regard to catchments, of course the issue across different catchments is different. It may be sediment, it may be nitrates, it may be E. coli. I am surprised that the member might argue not to use the levy to address some of those issues, because the source is often very difficult to establish. And also, again, I would have expected the member to be fully cognisant of the fact that any resource that we use—any resource from the extraction of that resource through the manufacturing of it, through the use of it, through the disposal of it—has an impact on our environment all the way through. And therefore, putting the levy at the end, at the disposal end, and then using that levy to address issues that occur for the environment all the way through the use of that resource is a very sensible thing to do and a thing that, as I mentioned before, is being done by other jurisdictions—South Australia, New South Wales, Ireland. So we’re not reinventing something here; it’s being done elsewhere.

Hon RACHEL BROOKING (Labour—Dunedin): Thank you, Madam Chair. I’m still on clause 4 and on that subparagraph (ii) that the Minister was just talking about. It’s been interesting in her answers to Dr Duncan Webb and the answer we’ve just had on that nexus between waste and general environment being to do with a circular economy. I think that that’s the sort of concept that I heard the Minister talking about, and I’m very pleased to hear our Minister for the Environment talking about that and would hope that she will move with the responsibility for reducing waste legislation as well—a little plea there.

But the Minister was just saying other jurisdictions have got that this waste levy going to general environmental harm, and she was there making some examples about the whole-of-life issue, which I agree with. However, there are things that are not to do with waste—say, fertiliser running into a river, causing some pollution of the river. That’s not to do with waste; that is a separate issue. So that is why I have got a tabled amendment to amend both clause 4—that subparagraph (ii) that we’re talking about, which is the activities that reduce environmental harm—and clause 9, because the words are repeated there. At the moment, it reads “activities that reduce environmental harm or increase environmental benefits”, which is very wide and includes my fertiliser example and the example of coalmines and landfills and those sorts of things. That’s already covered by projects that provide for the remediation of contaminated sites at subparagraph (v). No problem with subparagraph (v); it’s just this breadth at subparagraph (ii).

So I’ve suggested, rather than have the “or increase environmental benefits”, to replace that with “caused by waste”. So subparagraph (ii) would read “activities that reduce environmental harm caused by waste”, and that provides the nexus. So I would be interested in the Minister’s comments on that, given her acceptance of the circular economy and that waste can lead its own life after it becomes waste, that goes on for many years and creates all sorts of environmental problems, and, of course, we want to move to a circular economy whereby we’re not actually creating waste. That is the long-term goal, in that we’re thinking of the whole life cycle of a product. I also note that the Greens have a proposed amendment which is similar, and that would be that they just add in activities relating to waste—is the change there—that “reduce environmental harm or increase environmental benefits”.

The question for the Minister, really, is, given her commitment to a circular economy and the examples that she’s given that relate to wider environmental benefits that still have some relationship to waste, why can we not amend subparagraph (ii) to be explicit about that nexus?

CHAIRPERSON (Maureen Pugh): I call Lawrence Xu-Nan.

Francisco Hernandez: I’m Francisco.

CHAIRPERSON (Maureen Pugh): Oh, Francisco. Sorry—Francisco, my apologies. Francisco Hernandez.

FRANCISCO HERNANDEZ (Green): No beard.

CHAIRPERSON (Maureen Pugh): No—I got it.

FRANCISCO HERNANDEZ: Thank you, Madam Chair. The crux of the question of this legislation to me is whether it will actually reduce waste volumes going to landfill. And for us to determine that, I’d like to ask three questions of the Minister for the Environment. Has there been any analysis done on the reduction of waste volume to landfill as a result of these proposed changes? And if so, what did the analysis say?

And the second question is what assumptions were made on price elasticity on the Ministry for the Environment waste model that is being referred to—the waste disposal levy model? Because when I worked at the Climate Change Commission, we used that model, and if my recollection serves, its waste is actually quite price inelastic. And that’s supported by the New Zealand Institute of Economic Research report, which came out with the waste disposal levy papers. So I’m just going to quote from it because it’s really important that we have a picture of how price inelastic waste is. So it reads, “there is some effect, but not a large effect on waste volumes. The percentage change in the volume of waste disposed … is much less than the percentage change in price of [waste] disposal—waste disposal … is price inelastic. … The international evidence … suggests that price changes are more effective if they are accompanied by other measures to reduce barriers to recycling and other alternatives.”

This feeds on to my third question to the Minister. Is there a breakdown on how the waste levy is intended to be spent? Because we’ve heard from my colleague the Hon Rachel Brooking about how the dehypothecation of the funds kind of makes it so that it can be spent on a whole wide range of other activities, which means there’s actually a world where the investment in resource recovery actually goes down as a result of the dehypothecation, which I’m sure everyone in this House would agree would be a very bad thing. And the other crucial thing is that the waste sector is essential for New Zealand to meet its climate targets, particularly around domestic methane. Unfortunately, this Government isn’t committed to supporting farmers in reducing their methane emissions as much as the previous Government was, which means it’s up to the waste sector to do the heavy lifting of reducing waste emissions. So there is a world where, if as a result of the dehypothecation in funding, there’s actually less money going to resource recovery, which would be bad.

I want to quote from the 2021 waste labour report. There were 224 expressions of interest received in that and only 34 were successfully funded. So we can already see that the existing funding for waste minimisation and waste recovery is already insufficient to meet with the demands of the resource recovery sector. And I’ll give an example for that. There’s a really good waste reduction initiative in Dunedin—the electorate which I’m based in as a list MP—called the Stitch Kitchen.

Hon Rachel Brooking: A great MP.

FRANCISCO HERNANDEZ: That’s right—go Dunedin; great city. That’s right; the Stitch Kitchen. What they do is they train people to reduce textile waste by giving people skills to sew, stitch, and recycle textiles that would have otherwise gone to waste. They’ve not been funded through the waste levy, and there’s thousands and thousands of other people around the country, lots of people doing great work in the resource recovery sphere that are not currently being funded because the current funds that already exist even before the dehypothecation are already insufficient. So I really want to make sure and really get a breakdown of how the waste levy will actually be spent, and get some sort of guarantee that the intention is to actually increase the resource recovery funding because we’re all saying that it’s really great to reduce the waste. That’s fantastic.

So I’m just going to sum up the three questions that I asked because I acknowledge that I’ve kind of circled around a wide variety of topics which are all still to do with waste. The first question to the Minister was: has there been any analysis done on the impact of the levy changes on waste volumes? The second question was: what assumptions were made on price elasticity and how responsive the garbage volumes are to the waste levy changes? And the third: is there a specific breakdown of how the waste levy will be spent? Thank you.

Hon PENNY SIMMONDS (Minister for the Environment): Thank you, Madam Chair. I will answer some of the questions that have been coming through. I just want to re-emphasise that the waste minimisation levy does not usurp any of the existing liabilities within the Resource Management Act and other relevant legislation that perhaps Steve Abel might have been inferring; that the levy would be used to clean up waste of existing operating industries where there might already be other legislation that covers their activities.

Also, in terms of the price elasticity, I’m very aware that the peak amount of waste that was being generated was 2018, and with the more substantial increases in price that came in from 2019 we are seeing a slight reduction in waste per head of population. So, obviously, as the price goes up there is some incentive to create less waste. It’s not perhaps the amounts that we are putting in. We are having to have that fine balance between ensuring that there is some incentive to reduce waste, being mindful of the cost of living crisis that we are in, and being sure that we have sufficient infrastructure there for other means such as reuse, recycling.

Your comments about the number of entities that aren’t getting funded: of course, this is a contestable fund and there’s a very robust process that is gone through so I won’t comment on individual applications that may not have gone through. But also, I would note that Cabinet have asked that Ministry for the Environment officials work to establish what might be an appropriate envelope of funding for each of the uses. So, very clearly, we are going to look at ring-fencing for each of the uses that are within the Act.

REUBEN DAVIDSON (Labour—Christchurch East): Thank you, Madam Chair. It’s good to be able to speak to this bill at the committee stage. I have just drafted an amendment and it’s just being delivered now, but I really want to speak to the contents and the background of that amendment.

In Christchurch East, we have a number of waste minimisation facilities and waste facilities, but we also have an incredible set of natural resources. So I just want you to imagine, if you can, a beautiful estuary, wetlands, and a beautiful river mouth that feeds into the estuary and creates bird life, native plants, and trees. It’s an incredible environment, it’s stunningly beautiful, and it’s also the home of the organics processing plant for not just Christchurch City but also the surrounding districts.

It’s a really large industrial organics processing plant that was opened in 2009. There are a lot of people who won’t have seen it, but there are not many people who haven’t smelt it. Members may well laugh, and it definitely has an odour, but it’s actually deeply disturbing—not just the odour but the impact that that odour has on the community. So some of the—

Steve Abel: Is it as bad as the dairy factory?

REUBEN DAVIDSON: It’s possibly worse than the dairy factory, I say to that member—possibly worse. There are residents in Bromley and the surrounds of the organics processing plant who, when it was at its worst, could not sleep in their homes. They literally had to leave their homes when the wind blew in certain directions and had to go and sleep in their cars in vehicle lay-bys upwind of where the odour was blowing. I think that’s a pretty unacceptable impact for an organics processing plant to have on a community.

Similarly, the local school in Bromley had to have days when kids could not leave the classroom. If you can imagine that: you’re at school, it’s lunchtime, you want to go outside and enjoy a healthy school lunch and you want to play with your mates, and the organics processing plant literally meant children could not go outside to play and could not go outside to eat their lunch. It’s a very, very negative impact for an organics processing plant to have.

Now, the really good news here is that there were a number of local residents who became very vocal and very organised and worked with city councillors who heard their concerns—and this comes to the first of many questions I have around this bill at the committee stage, and they’re around the question of engagement.

When changes are suggested at the level that is suggested in the amendments in this bill, and when these amendments are going to have the impacts that they will have on communities, the question really is around the Minister’s level of comfort with not having a select committee process for this bill, not allowing communities who will be impacted by the redirection of funds through the amendments in this bill to have a say, and what message that sends to communities about them having the ability to have their voice and their opinion into these amendments and their impacts. I think we have to be really conscious that we’re removing people’s ability to partake in the democratic process of changing laws, and when you literally don’t allow that to happen, I think there’s a real risk with that.

So the first question really is around the Minister’s level of comfort with skipping the select committee process, not allowing the select committee process, and what message the Minister thinks that sends to the communities that will be affected by—

Hon Member: A stink.

REUBEN DAVIDSON: Absolutely—by very real stinks that affect their home life, their school life, and their community.

CELIA WADE-BROWN (Green): Thank you, Madam Chair. I’d like to bring some local government experience to this area. My questions will relate to what this actually reduces the spending on. I actually had the waste portfolio at Wellington City Council in 2008 when this excellent bill became an Act, and some of you may understand how robust and long-lasting a good Green bill can be, because this was brought in not by the larger parties but by the work of Nándor Tánczos. So I ask the Minister to reflect on how this bill has lasted through various changes of Government and, until now, has begun to really reduce waste.

I’d like to ask the Minister whether she agrees that changing the breadth of areas that can be funded from this bill—and none of us disagree with remediating landfills and those areas that have been added; we just are concerned about removing the funding from the preventative side of things. Is the Minister concerned that, by widening the application of the levy, we will do less on product stewardship on the six products—there are only six product areas: plastic packaging; tyres; electrical and electronic products, colloquially known as e-waste; agrichemicals and their containers; refrigerants and other synthetic greenhouse gases, another area where waste and climate change connect; and farm plastics. Those were all agreed in, I think, 2020.

Surely, the Minister must want some more product stewardship at the top of the cliff. I see the remediation activities and the dealing with the effects of climate change as another example of this Government dealing with the ambulance at the bottom of the cliff rather than investing in long-term, intergenerational prevention measures. So if the Minister could address what areas are not being funded because of the transfer; if she could address the areas of what products should have some stewardship applied—this is meant to be an innovative process that helps manufacturers redesign their processes.

If you look at other countries, let’s take a car example, because I know everyone in New Zealand seems to be obsessed with cars. The new Volvo has been produced. I think it uses wool—so that will keep certain members in this Chamber very happy—in its fabric; it recycles materials; and its embodied energy is far lower. Now, New Zealand is not manufacturing cars but we do manufacture many other products, and also we import things—I think, maybe some limitations on what’s imported; making sure that you can recycle it. Demanding that the individual household sorts—instead of putting it on the system. Would the Minister agree that relying on individual action with confusing and inadequate labelling is far inferior to fixing the system, the manufacture, and the import of goods that cannot be recycled, and that we should be able to fund that prevention of waste, prevention of pollution, using this levy?

I’m sure the Minister would agree that this is a good partnership at the moment between local and central government, the levy sharing. It might be interesting to look into a little bit more whether the local government share is being used wisely, or whether it’s just being used to prop up some fairly ineffective kerbside recycling in some places. Thank you.

Hon PENNY SIMMONDS (Minister for the Environment): Thank you, Madam Chair. I will answer some of the questions that have come through with regard to the bad-smelling Organics Processing Plant in Christchurch. That is certainly an example of where other legislation is applicable; not this amendment that we are discussing at the moment.

To the member who has just sat down, Celia Wade-Brown, if I could remind her that the previous Government had no addition to the levy from 2025 onwards. This amendment is, in fact, increasing the levy and increasing the amount of money that will come in. I think you made a comment about removing funding. It’s not removing funding; it’s increasing the funding. I realised that in the discussion that we had a little earlier, you may not have heard around how the Government intends to identify what the envelope of funding will be for each of the uses that it can be used for in the legislation.

In terms of the amount of funding that’s going to be available and the expansion of the use of funding, we also discussed earlier that widening the purpose of the funding is quite normal in other jurisdictions. That is being done in South Australia, in NSW, and in Ireland. And of course, we talked about the environmental impacts of any resource that we use, right through from the extraction of that resource, to the manufacturing, to the use, to the disposal. There are environmental impacts that occur along that range of use. Therefore, taking the levy at the disposal end of it, it is entirely appropriate to then use that to address some of the environmental impacts that occur through its life cycle. Thank you.

MIKE BUTTERICK (National—Wairarapa): I move, That debate on this question now close.

CHAIRPERSON (Maureen Pugh): I’m not taking the closure motion. There’s still quite a bit of new material coming through. I call the Hon Rachel Brooking.

Hon RACHEL BROOKING (Labour—Dunedin): Thank you, Madam Chair. I’ll just start with reminding the Minister of a couple of my questions that haven’t been answered. One was in relation to the contamination fund—that was my first one. Then just on this piece that we’ve just been discussing again, I’ve put up an amendment to make that nexus towards waste.

I’ve heard the Minister say that the circular economy is very wide, so there should be wide-ranging issues that the money can be spent on. So perhaps you’d be interested in amendments rather than “caused by waste” around environmental problems that “are related to the circular economy”, or something to that effect if that is the purpose of this legislation—that it doesn’t expand to my fertiliser point. That’s the issue: the fertiliser, at the moment, is still included in paragraph (ii). If it should be the whole life cycle of a product that can have many lives, then I’m sure there is some wording that could achieve that in an amendment to (ii).

But in terms of new material, I am moving now to section 5, which is the interpretation clause, and just a very small question here. I noticed that the definition of “contaminant” is the same as that which is found in the Resource Management Act; whereas a few words down we get to “hazardous substance” and that just refers to the definition in the Hazardous Substances and New Organisms Act. I have no comments on either of those definitions. It’s just: why that inconsistency where one refers to the relevant other statute and one uses the words from the other relevant statute? Simple question. So that’s on section 5.

So I’ll move through now to some other clauses as well and note that the transitional and savings provisions are in Schedule 1. So if we move to Schedule 1, this has some dates for the criteria and it’s the earlier of the Minister notifying criteria or 1 January 2025. I’m just wondering about this because the criteria are not mandatory. So has the Schedule been drafted with the idea that there will definitely be some criteria? Because then it’s possible that this will come into effect on 1 January 2025 without criteria found in section 38. So that’s another small question that that Minister might be able to answer as well.

Another question, going back to my Amendment Papers—and this is one that I haven’t discussed yet. Well, the first one also amends clause 9 because we have that repetition of “environmental harm or increase environmental benefits”. So I’ve proposed that the “increase environmental benefits” comes off and that’s replaced with “caused by waste”. So “funding activities that reduce environmental harm caused by waste”. But as I’ve just proposed to the Minister, if she would prefer a reference to circular economy or something along those lines, then that would work as well. Again, there we have this repetition of the funding of local authorities—and the Minister’s confirmed that that is from the central government fund, not the local government half.

Then we have a reference to the wider functions and duties of the ministry, including hazardous substances, and we’ve had a conversation as well about that. But my question is why there’s no reference here to the remediation of contaminated sites. Is that because it’s coming from some other fund or is there a reason for that? So I have put up an amendment that would provide that, so in clause 9 to add a new paragraph (vii) funding activities that provide for the remediation of contaminated sites. I don’t know how the architecture of the legislation is working in that regard, and if that’s a helpful suggestion or not.

Hon PENNY SIMMONDS (Minister for the Environment): Thank you, Madam Chair, and I apologise. I did overlook the question around the Contaminated Sites Remediation Fund, and my apologies for that. Yes, you’re correct: the fund will close as a separate appropriation and instead it will be funded from the levy at a much higher levy. I have indicated that I intend to see this as a priority: funding the remediation of contaminated and vulnerable sites.

In terms of the criteria for funding contaminated sites, we’ll be drawing on the criteria from the Contaminated Sites Remediation Fund and seeking further input from the Waste Advisory Board. So certainly there’s nothing lost there. In fact, there is going to be a gain of greater access to a greater level of funding.

Hon DAVID PARKER (Labour): Thank you, Madam Chair. I actually understand the genesis of this bill, because the best parts of it are Labour Party policy. There are problems with the Waste Minimisation Fund in the limits to which it can be put. The two main problems are that you can’t use the fund for the development of product stewardship schemes that we need as a country to bring forward in order to manage solid waste. The waste minimisation levy is collected from New Zealanders and municipalities in respect of solid waste going into landfills, and it is appropriate that that money be able to be put towards the efforts that reduce that waste in order to move towards a circular economy. It is a public policy failure that this bill fixes, that you should be able to use this money to produce product stewardship schemes. So all well and good. It’s also good and proper that legacy landfills, old landfills generally owned by councils, should be able to be fixed up through money from the waste management levy, and this bill also allows that—although not in a careful enough manner—and that’s good.

But those legacy landfills aren’t just a central government problem, they’re a local government problem, and this bill doesn’t fix that because it doesn’t allow the local government to put their share of the waste minimisation money into their share of cleaning up these old landfills. And that’s one of the problems you have when you try and do these things through urgency. Although Rachel Brooking’s amendments fix that problem, the National Party is going to vote against them—I know this because the Hon Rachel Brooking came to me and said, “How do you manage these things?” And we said, “Well, we actually talk to the Minister.” So she talked to the Minister and the Minister could see the merit, but the Minister doesn’t seem to be in a position, because of the lack of some Cabinet authority or something like that, to agree to the amendments. And that’s the problem of doing this sort of thing through urgency.

What’s the other problem with this? The poor definition of what this money can now be spent on is so broad that it goes beyond remediating problems arising from solid waste. The Government, having stripped out in this Budget all of the money from the Freshwater Improvement Fund and other funds like that that can address fresh water, have now turned this into a slush fund that could be, if they wanted, used to go on things other than remediation of solid waste. And that is wrong. That’s why, on this side of the House, despite the fact that there are some good things in this bill, we’re forced to oppose it, to drag this out, to prove that this shouldn’t be being done during urgency. It’s not central to the Budget. There’s no reason this couldn’t have been done—you know, for the next seven weeks, Parliament is sitting one week—one week. So no question time—[Interruption] Two weeks, is it? Sorry, two weeks—

Hon Member: But one’s a scrutiny week.

Hon DAVID PARKER: So one’s a scrutiny week. Yeah, there’s only one week of question time in the next seven weeks. So we can’t scrutinise this, we can’t hold the Government to account for this, for other aspects of the Budget—you know, this, Madam Chair, is all arising from this part of the bill.

I ask the committee—there are senior members on the other side of the Chamber; they should be looking at Rachel Brooking’s amendments on this, which are very, very simple and do what I have described. They should be backing them. They should be backing them, notwithstanding this urgency. Show some leadership. Do the right thing here. This is, essentially, reasonable legislation, for the reasons that I’ve described, but it’s being mucked up by the Government by doing it under urgency, because no one on the front bench there is willing to actually look at the amendments and say, as we used to do with Simon Power across the House in the old days, “Just have a look at them.” Have a look at those things, ask the officials from the Ministry for the Environment as to whether these are sensible amendments that have been put up, and if they are, vote in favour of them. Vote in favour of them and make this legislation better and sort out the issues that this needs to sort out, including limiting this to being solid waste rather than other forms of waste, and making sure that you’re fixing it for councils as well as for central government.

Hon PENNY SIMMONDS (Minister for the Environment): Thank you, Madam Chair, and I thank the member the Hon David Parker, who has just sat down, for his impassioned comments on this. I also thank the member for the work that was done under his time in terms of the container deposit scheme and other stewardship schemes. I’m sure he was delighted to see the tyre scheme starting on 1 March. Certainly, there is work in the pipeline there that will be progressed.

If I could just assure him, there is some support for the local government. Not only are they getting of course a greater amount of money—their 50 percent proportion remains the same but it’s of a greater amount—but also the ability to apply to have the levy waived for the remediation work. As I have said earlier, I was talking to a small local authority in the South Island, where they had two quite significant contaminated sites that were going to cost about $15 million to remediate. They were encouraged, of course, to apply for assistance from central government for that, but now they also, with the passing of this bill, would have the opportunity to apply to have the levy waived for that work, which they told me was somewhere between 8 and 10 percent of the cost of that remediation and quite a barrier to those smaller councils. So I believe this bill is addressing some of the issues for local authorities.

But can I just assure the member and also the Hon Rachel Brooking that in the legislative programme for this year, I also have a wider reform of waste legislation in there that can address some other matters and give us time to consider whether there might be merit in expanding the scope of what the local authority can use their proportion for. So all is not lost!

CHAIRPERSON (Barbara Kuriger): I’m going to call Steve Abel. I just want to say, at this point, I was listening to the debate before I came in and the Hon David Parker just gave a very good summary of the concerns from the Labour Party, as did Rachel Brooking. What I’ve been hearing is concern about where the money comes from and who’s receiving it. So I’m actually looking for new questions for the Minister now, because I think a lot of it’s been summed up pretty well.

STEVE ABEL (Green): Thank you, Madam Chair; however, I would say, yes, I absolutely hear you on that, and I have got new questions. The essential question on the excellent amendment from my colleague Rachel Brooking and a very similar amendment from my colleague Kahurangi Carter, which says “activities relating to waste”, adding in those words to make sure it’s not just going to be used for anything, has not actually been addressed by the Minister. The Minister hasn’t responded to whether that very sensible amendment is going to be supported.

The other question I’ve got is—the Minister speaks a lot about the waiving of criteria for the waste levy. Now, that is a bit of an alarm bell for us because it’s right that it should be waived in exceptional circumstances, but the criteria on which it will be waived needs to be set out very clearly, because I think there is a risk that a large industrial waste producer would be getting favours and that the levy could be waived in the wrong instance.

The other point I want to raise with the Minister is about the broadness of your comment on the whole of the waste generation process. The Minister talked about how all the way down the line of some sort of activity, there is generation of waste. My concern about that is the implication is that if you were demolishing an asbestos-laden building and some industry did it in a bad way and left the nuisance of remnant asbestos on that site, that the cost of cleaning that up—and I’m talking about a contemporary activity, not a historical one—could then be covered by the waste levy rather than the assurance imposed in the consent process on that business to make sure they didn’t create the nuisance in the first place and that they had imposed on them a requirement to clean it up if they did make that error. I think the Minister’s explanation implies that the waste levy could be used to clean up the mess created by industries all the way down the line, including at the dumping stage.

I have another amendment to propose, which is tabled. It’s in clause 9(1). The concern is that the levy could be used, for example, under the current wording, for the purpose of developing, operating, or maintaining a waste incineration facility or a waste-to-energy incineration plant. Under the current wording, Minister, it is not clear that that sort of an application could not be funded through the waste levy, so we propose simply to put in an exclusion clause in clause 9(1) so that no levy money may be used for the purpose of developing, operating, or maintaining a waste incineration plant—that could, in fact, be brought into a waste incineration plant, including waste-to-energy.

That is something that the New Zealand public, and certainly the people of Waimate, who are currently trying to oppose a waste-to-energy plant down there, an incinerator, would not like to see their waste levy going towards. Waste incineration works against waste minimisation. Because waste incinerators are hungry beasts that want to be fed by waste, they actually function to disincentivise waste minimisation. It’s a very good reason why waste incineration should be an activity that is not permitted to be funded through any sort of waste minimisation levy. Thank you.

Hon PENNY SIMMONDS (Minister for the Environment): Can I just assure the member again that it is not the intention for the waste levy to be used to usurp any conditions or requirements that might be put in place by other legislation, such as the Resource Management Act. The member seems to be implying that that might happen, and can I assure him of that.

Can I just say that the broadening of the scope of what the levy can be used for is very much a pragmatic solution to be able to achieve positive environmental benefits for all of us, and if we try and limit that too much, then we may lose the opportunity to fund some very important projects, and so it concerns me that the member might want to limit it to things like waste incineration and waste-to-energy plants—over time, technology may change how these things are done. In fact, you may be wanting to constrain new and better technology that may be useful for environmental outcomes in the future.

So I think that the constant refrain that is coming from the Opposition about wanting to narrow this down is taking a much too current focus on the innovative things that could be funded to enhance the environment, and I would just say that we need to be much more forward-looking and enabling in this amendment.

SCOTT WILLIS (Green): Thank you, Madam Chair, and thank you to the Minister for responding to the questions. I want to give a bit of a congratulations for increasing the levy. I think this is one of the limited good things about this bill. I also want to give a shout out to Labour for trying to claim a Green bill. Good on you, but no. Ha, ha!

My concern is along the lines of what many other members have expressed, with the widening of the application of the waste minimisation levy to apply to a range of other activities. I do want to just acknowledge that the Minister mentioned that she does not want to limit other innovation, but the precise question that Steve Abel asked was around the use of the levy to fund waste incineration, waste to energy—which is actually badly named; it should be called energy to waste. That is something that we would like clarity on.

That is not my question. However, I would like the Minister to come back to answer that question. We do want to make sure that we are not using a waste levy to fund energy-to-waste incineration, which causes greater pollutants to enter our atmosphere, and toxic ash to be deposited in rural communities like Waimate and like Kaipara. We don’t want to see a widened waste levy used to encourage waste and to force people—truckloads of waste from the South Island descending on Waimate through rural roads and communities. We don’t want to see that happen.

My primary question, however, is a little bit different. It is still related to communities—particularly related to rural communities and particularly related to regional development. My question is, really: what impact will the widening of the application of the waste levy have on those Māori and community organisations that deal in waste, that help us reduce our waste, and that help build a circular economy?

I’m thinking particularly of those exemplary organisations that are members of the Zero Waste Network. They are often run under a title of CRCs, which began in the day, standing for community resource centres, and then changed to community recycling centres and really have come to mean community resilience centres. They are funded out of using the levy to fund their work in the communities. But, of course, as we know—and as the Greens keep on banging on about—everything is connected. All of that work is connected.

This reflects back to clause 4 and clause 9. We really want to see what that effect is going to be, because these community organisations hold our communities together. There are four national networks, two of whom will be directly impacted by this change in use. That’s the Zero Waste Network and Para Kore. They will be directly impacted by the widening and therefore the reduction in resources for those networks. This is really, really important because they are connected to the other two networks—the Community Energy Network, who have had their funding cut, and the envirohubs network, who have had their funding cut. All of them work together—

CHAIRPERSON (Barbara Kuriger): So is the member’s question “Will these organisations be affected?”, because we’re looking for questions for the Minister—because we hear the concerns.

SCOTT WILLIS: Thank you, Madam Chair. No. My question is not specifically those organisations, but what is the impact on the community organisations that depend on doing the mahi to create a circular economy from the waste levy. That is fundamentally the question that I would like a response to. I have a host of others, but I particularly would like that question answered.

To just circle back, I also want an undertaking—or more clarification—on the question that Steve Abel asked about whether, in any way, shape, or form, the waste levy could possibly be used for incineration—for energy-to-waste projects. This is something we want to avoid at all costs. So there are two questions there, please. Thank you.

Hon PENNY SIMMONDS (Minister for the Environment): A slightly unusual request—because, of course, the levy is a contestable process with a very robust process that is not the Minister’s involvement, so you’re asking for some assurances about making sure certain entities will be funded through this. Certainly, there will be a contestable levy there. Entities will be able to apply for funding and go through the normal process.

Going back to the waste-to-energy activities, this really relates to why we don’t want to narrow down and say things would be excluded because of the changes in technology, because of the innovation in the future. There are current examples of waste-to-energy activities, such as anaerobic digestion, a lower odour solution to dealing with organic waste. By limiting the waste-to-energy options, we limit those innovations, those technology changes.

JAMES MEAGER (National—Rangitata): I move, That debate on this question now close.

CHAIRPERSON (Barbara Kuriger): I’m going to go to the Hon Rachel Brooking. I believe a lot of this conversation is becoming exhausted, and we are really looking for specific questions that are new.

Hon RACHEL BROOKING (Labour—Dunedin): Thank you, Madam Chair. I have been going through fairly much clause by clause, so now I’m up to clause 11, and this is about new section 38A, criteria for funding management. Now, the Minister may, by notice in Gazette, set that criteria or change it, and then there are some issues about what the criteria may include, that I’ll get to. But I’m interested in the “may” in 38A, and if in fact this should be a compulsory “must” that the Minister should do to have this criteria, and we touched on the transitional provisions before.

Then, of course, the criteria may include things relating to waste management infrastructure, limits on the funding costs, and identification, in relation to an emergency, of the things that are emergency waste and whose management will be funded. A little question about whose management will be funded, how that works in the context of that section. I presume it’s the people who are there doing something in relation to an emergency that are managing something—but it seems a curious wording; that is my point. It’s not a policy position there, but if there could be some clarification on what that “whose management” means. And then, also, if the Minister has considered any risk of future events to be included in that criteria.

So that’s two questions: why is it discretionary, one; and, two, what does “whose management” mean? And, actually, three questions: has there been any consideration about future, likely events? And I’m thinking here because we know that there are landfills in coastal areas. Is that the sort of thing that should be considered?

We touched on, before, the role of local authorities, and we know—as you’ve said, Madam Chair, we’ve well traversed the levy that is going to the Government, that the scope has been widened. But the levy that is going to local government, the scope hasn’t been widened, and the Minister has noted that she might be doing some legislation in the future that could widen that local authority’s scope to also include site remediation and emergencies.

I have an amendment that could do that now. So that would amend—now, moving away from clause 11; that would insert a new clause 9A. And in section 32 of the primary legislation of the Act that we’re amending, I’ve put in there that Governments could spend on projects that provide for the remediation of contaminated sites and that could be expanded out to emergencies as well to match this amendment bill. So that could be done now and there’s a tabled amendment doing that.

Going back to some other points, there was a discussion about how the previous Government hadn’t changed the waste levy, and I’d like confirmation from the Minister that her comment there was because the waste levy is normally set in regulations and the regulations were for a period that ended in this next period and that the Government’s not changing that.

The next comment is that the Minister didn’t answer my question in relation to section 30. And if that should also include site contamination, the remediation of contaminated sites—that seems to be missing from that section. And, also, we haven’t heard yet that answer about why this expansion needs to apply to fertiliser. That is my precise question on—going back to 4(2)(a), but also, as you’ve heard some questions there about clause 11 and new section 38A.

CAMILLA BELICH (Labour): Thank you, Madam Chair. It’s a pleasure to take my first call in relation to the Waste Minimisation (Waste Disposal Levy) Amendment Bill. I want to specifically look at a particular part of the bill that’s been touched on very briefly by my colleague Rachel Brooking, and I want to expand on that more as one of my roles is to be the Labour Party’s spokesperson on emergency management. A certain section of this bill is focused on emergency management and dealing with waste as a result of emergencies. So I wanted to, if I could, take the Minister for the Environment back to the definition of “emergency” in Part 1, which we’re currently on, which is the same as what is currently in the primary piece of legislation, the Civil Defence Emergency Management Act.

Now, I have checked that in advance of asking the Minister my question on this issue, and the definition of “emergency”, essentially, in that primary piece of legislation is very wide. Essentially, if you go through the definition it’s, basically, anything that happens whether natural or otherwise that results in a situation that can’t be managed without the involvement of emergency services—so an extremely wide definition. I wanted to ask the Minister if that was intentional or if it just was consistency within the Act—if she did in fact want the scope to be widened so much to either be just consistent or so that the levy could be used in a wider sense.

The other question I wanted to ask was back to another part of new section 38A, inserted in the primary legislation by clause 11 of the bill, which I don’t think we have touched on, which is paragraph (b) of section 38A(3). This is the criteria that the Minister will use and must look at before considering funding “management of emergency waste and repair or replacement of waste management and minimisation infrastructure”. Now, one section that we haven’t touched on is the section on what other matters the Minister may consider relevant to that. So there is a list there that the Minister must consider, but then paragraph (b) of section 38A(3), there, essentially, means that Minister can look at anything that the Minister may think is relevant.

So I wanted to know: what are those other things that might be relevant to justify the inclusion of such a wide clause? Was that purposeful in the sense that the Minister wanted to think widely? She’s made some comments in relation to other sections—but not, I think, this section; but I’m willing to be corrected on that—that she wanted to, obviously, have a wider criteria. But it seems very open there and I just wanted to know: has she received any specific advice about the types of other things that may be considered when the Minister sets that criteria? Because this is a criteria that can be set, once this legislation is passed, by the Minister alone. I think it’s important to have some clarity on that before moving forward.

Also, I’m not sure if we’ve touched that much on Schedule 1, which I understand is part of this debate on Part 1. I think that it’s important for the Minister, really, to look at these transitional provisions and just say, you know, for example, why was the date of 1 January 2025 considered as part of that schedule? Was that because of any particular reason, or did it just happen to be decided that next year was a good time to start it? Did she consider introducing the particular schedule provisions earlier or not? It’s a question I have, and I don’t think we’ve touched on that schedule.

Hon PENNY SIMMONDS (Minister for the Environment): Thank you, Mr Chair. Moving back to the questions from the Hon Rachel Brooking around her concern about whose management the Waste Minimisation (Waste Disposal Levy) Amendment Bill is talking about in clause 11, which inserts section 38A(2)(c)—and that then relates to the question that has just been asked by the member sitting down, Camilla Belich—the subsection there is the “identification, in relation to an emergency, of things that are emergency waste, and whose management will be funded.” The management is referring to the emergency waste, and the reason why the definition of “emergency” in here has the same meaning as in section 4 of the Civil Defence Emergency Management Act is that we are intending specifically that the levy can be used for waste that is created in an emergency situation—a flood, an earthquake—where the disposal of that waste needs to occur quickly, given the impact that it can have on human health and the environment.

TIM COSTLEY (National—Ōtaki): I move, That debate on this question now close.

CHAIRPERSON (Greg O’Connor): Just to members, I will take another call. Just be aware: I have been watching this and I’m aware of the previous Chair—the warning she’s given. So I’m well aware of the need for new material.

Hon KIERAN McANULTY (Labour): Point of order, sir. Thank you very much, I appreciate that guidance. Just wanting some clarification from you, however. Since the previous presiding officer indicated to the committee that she was seeking new material, I’m of the view that the two subsequent calls were new material. So to then receive that guidance from you is somewhat confusing. So could you please confirm or clarify to the committee, in your view, whether the previous two calls did fit the criteria that you’re after?

CHAIRPERSON (Greg O’Connor): Just nothing wrong with a little reassurance for the committee and that, yes, I’m aware that there was some new material in there—now, of course, being dealt with by the Minister, so it’s no longer new material.

Hon DAVID PARKER (Labour): Thank you, Mr Chairman. Since my first contribution was not addressed by the Minister with particularity as to the effect of these new clauses, I went and printed off the relevant parts of the original Act and I still would like the Minister—and actually members on the other side—to actually read the changes in the section. There’s some good lawyers on the other side. This is not hard. We’re sitting under urgency. This is meant to be a meaningful committee stage where if there are problems in legislation, we fix them because if we don’t fix them there’s no select committee process to fix them.

I want to take the Minister in particular to clause 4 of the bill, which amends section 3 of the Act. Now, section 3 of the Act—and other members there can go on their devices; it’s very short—currently, it’s the purpose of the Act and it says the purpose of the Act currently is to “(a) protect the environment from harm; and (b) provide environmental, social, economic, and cultural benefits.” It’s all under the first subsection; section 3(1) says, “The purpose of this Act is to encourage waste minimisation and a decrease in waste disposal …”. The new purpose section is different. It says that the purpose is to “raise revenue to fund—(i) the promotion and achievement of waste minimisation;” which is a bit like the original purpose; and “(ii) activities that reduce environmental harm or increase environmental benefits;”, and that’s not tied or limited to solid waste or contaminants from solid waste. That is the issue that is so simple to be fixed and yet the Government won’t.

Now, I would like the Minister to stand and explain to the committee how we are to interpret new section 3(2)(a)(ii), inserted by clause 4 of this bill, which reads “[activity to] reduce environmental harm or increase environmental benefits”, and explain to the committee how that is not inclusive of things more than solid waste. Because it plainly is, and it plainly—look, there’s a lawyer there from Queenstown. Look, he knows this; he knows this. He’s a clever lawyer. So are some other people there. We’re not all draftspeople in this House, but there’s enough of us to know that that clause there reads wider than solid waste and therefore this is enabling the Waste Minimisation Fund—now we’ve got someone on the other side saying, “hands down”. This is the emotion—just copying what they’re doing. “Calm down. Nothing to worry about here. No need to do anything. No need to fix anything. We’re not under urgency. We just want to go home.”

Well, you will go home faster if you pay attention to this and fix this obvious mistake in clause 4 by adding the words “from waste”. That’s all we’re asking to do so that this can’t be used for issues other than waste.

Hon PENNY SIMMONDS (Minister for the Environment): I will go over the matters that we have already discussed around this broadening to environmental harm and environmental benefits. Given that any resources that we use at any time have a broad impact on the environment from when they are extracted, grown, taken out of the ground, whatever, to create those resources; through to the manufacture of those resources; through to the use of those resources; and the final disposal of those resources. That product, as it goes through its cycle and becomes waste when it is disposed of, that is an appropriate time to extract a levy and enable that levy to be applied to any of the environmental impacts that occur through the life cycle of that product.

Dr LAWRENCE XU-NAN (Green): Thank you, Mr Chair. I also thank the Minister for being so engaged. This bill is hugely important because it’s being put through under urgency when it’s only tangentially related to the Budget and would normally go to a select committee, hence all of these questions around waste. If I may, I would like to point out a couple of things in clause 4 that haven’t really been touched on, and this is in relation to the supplementary analysis report, which has to be done because of urgency, and a regulatory impact statement could not have been done, and there is a lot of concern around this.

So one of things that hasn’t really been explored in all of the discussions that we had this morning is around clause 4(2)(a)(iv), which is around the ministry. We have talked about different budgets, and I really appreciate the fact that the Minister has talked about different uses as well. But I would like to know, from a Budget perspective, with the deficit that is being created as a result of a reduced funding in Vote Environment, whether we are expecting proportionally that the amount of money that is created as part of that deficit in Vote Environment is going to be coming out of this waste levy—as in, the money that wasn’t funded in Vote Environment; are we expecting that same amount to come out of the levy? Because, specifically, this broadens to the fact that the ministry will be using this funding to undertake its functions and duties and exercise its power in relation to waste management, but it’s still something that would normally have been covered in a Budget. So that is my first question.

My second question is around clause 4(2)(a)(iii) around emergency management. Now, Minister, you mentioned before the type of things, and, Mr Chair, just before, the Minister mentioned emergency uses, and I think that in the second reading and the first reading we talked about the fact that it could be used for, like, Cyclone Gabrielle and the clean-up. So all of those are considered as waste. I would like to know from the Minister—the Minister spoke on other applicable funds—how this fund is going to interact with the Climate Emergency Response Fund, which is being partially used for things like climate adaptation and cleaning up of this waste—before we see that the Minister has retracted the transparency in the reporting of the Climate Emergency Response Fund as of this year.

So it will be really good to know from the Minister in terms of the interaction between the use of the waste levy on emergency management and also the interaction with the Climate Emergency Response Fund, which was started under the Hon James Shaw, the previous climate change Minister. So those are my two questions from clause 4.

Now to clause 5, we talked about—and the Hon David Parker talked about—waste and solids and all of that. I would like to get a piece of clarification from the Minister because, again, this bill may seem quite small, but it has huge implications also from a judiciary perspective. So it’s also really important when we’re looking at the Hansard, when lawyers are looking at this and at any sort of potential use, that the definition is really tight and we have an understanding from the Minister of what those definitions could be used for.

The specific one that I’m looking at is the definition of “contaminated site”; it means land “where a contaminant is present, or likely to be present,”. In paragraph (a) of amended section 5—this is in clause 5—it says “in any physical state”—which I’m assuming relates to the definition of “contaminant”, which means a substance including gases, odours, compounds, liquids, solids, and micro-organisms. I’m assuming that “in any physical state” will also be referring to those substances. However, my key focus is on the word “land”. Now, my colleague Steve Abel mentioned run-off and the pollution we see in our waterways. I would like to ask the Minister whether things like rivers and waterways are considered “land”, in this case.

So those are my three questions, and I really appreciate this opportunity for us to discuss more broadly in lieu of the select committee process.

Hon RACHEL BROOKING (Labour—Dunedin): I’m just going to take a very short call here because it does relate to what the Minister just said. The Minister was talking about the clause that we’ve spoken a lot about, which is the activities that reduce environmental harms—I think these are your words, Minister; apologies if they’re not quite right—that occur through the life of a product. The point was being made again that waste has many lives. So I would really implore the Minister to consider an amendment—doesn’t have to be the one that I put up being caused by waste—that it could be then “activities that reduce environmental harm related to the life of a product”, to use the Minister’s words. So a very short call. If this is what the Minister means then we should say it in the legislation, and that would make a lot of us a lot more comfortable about these changes. Thank you.

Hon PENNY SIMMONDS (Minister for the Environment): Relating to that, and also the question from the Hon David Parker—just noting that already in the rest of the Act, there is wider scope than solid waste; for example, the declaration of refrigeration gases as a priority product. So we just need to be very careful that what you are asking for in terms of narrowing down doesn’t actually conflict with what is already within the rest of the Act.

JAMES MEAGER (National—Rangitata): I move, That debate on this question now close.

Hon KIERAN McANULTY (Labour): Thank you very much, Mr Chair. I appreciate that. This is the first opportunity I’ve had to make a call on this, and, actually, in all honesty, I wasn’t intending to. But then I heard the Minister’s response regarding the definition of an emergency, and I thought that it’s important that we dive into this. So I’m not going to ask the same question, albeit the same topic that has been touched on once previously, but this is directly in response to the answer that the Minister gave. Camilla Belich asked about the definition of “emergency”, and the Minister responded by saying that it is as is defined in the Civil Defence Emergency Management Act 2002. Now, as the committee knows, there was an emergency management bill going through the House, and, at the time, the National Party did not express any opposition at all to the updated definition that was provided in that Act.

Now, we might be wondering why this is important. Well, there’s one difference in the definition between that provided in the 2002 Act, and the definition proposed in the 2023 bill—and it’s quite a significant difference. It includes the addition of “pandemic” to the definition of “emergency”. Now, if we are to proceed with this, using the definition as provided in the Act in 2002, which will exclude a pandemic, given what this country’s been through during COVID, if we have another pandemic, under the current definition proposed in this bill, a pandemic will not qualify under the definition of “emergency”. Now, I think that’s quite serious.

I would like the Minister to respond as to whether she would be willing, either through an amendment under our name or simply to do so herself, to simply include “pandemic” in the definition of “emergency”. What we don’t want is for another pandemic to come along, given all the lessons that we as a country learnt through COVID, and all the changes to bills and Acts that have been made, and regulation, to account for a future pandemic, and then everything in this bill cannot be triggered because it doesn’t include it in the definition of “emergency”. It’s a genuine request and I’d really like to hear what the Minister has to say about that.

Hon PENNY SIMMONDS (Minister for the Environment): It is very deliberate that “emergency” is being given the same meaning as in section 4 of the Civil Defence (Emergency Management) Act 2002. The volume and the significant risks to human and environmental health from waste that is created from a flood or an earthquake, I would suggest, is very different from waste created from a pandemic.

TIM COSTLEY (National—Ōtaki): I move, That debate on this question now close.

Hon BARBARA EDMONDS (Labour—Mana): Thank you, Mr Chair. I’m really grateful that I’ve got to receive my first call on the Waste Minimisation (Waste Disposal Levy) Amendment Bill. I apologise to my colleague right here, Glen Bennett, who is also waiting for a call on this bill, because he’s actually on the Environment Committee.

My question to the Minister for the Environment is actually around some of the transitional and savings provisions which are in Schedule 1 of Part 1. This is a new point, because this bill, if I step through it, looks to expand the purpose of the waste levy. It also looks around some waiver provisions, and the transitional savings provisions only refer to the consideration of criteria for approval of projects to remediate contaminated sites and the use of levy collected before the commencement of the amendment Act.

Now, members of this committee will remember that, in early January last year and on Valentine’s Day, we had two major natural disasters in New Zealand. We had the floods in Auckland, and then we had the cyclone that went through Hawke’s Bay and also parts of Northland. As part of the response to that, there were a number of Orders in Council that were put through to deal with that emergency event, including one called the Severe Weather Emergency Recovery (Waste Minimisation) Order 2023. That particular order gave an exemption from levy payments on cyclone and flood waste. That exemption keeps the operator exempt from requirements under Part 3 of the Act, which this bill is changing, to pay for the levy referred to in that part in relation to cyclone and flood waste before the close of 24 July 2025. So that’s the date that that particular order closes. That’s when that order is no longer in force. But I don’t see anything in this particular bill or the regulatory impact statement that provides a savings provision—

Glen Bennett: There’s none.

Hon BARBARA EDMONDS: Oh, there is none—that’s why I couldn’t find it. Is that particular order, which was given and put through under the previous Act, which this bill is now changing, still in force—because it refers to the old Part 3. Once this bill is enacted, there is a new Part 3. Will this bill still allow those people, because of the cyclone and flood waste, to be exempt from the levy?

The second part of that question is: if not, does that mean that the increase that comes into force by this bill, by July 2024—even though that exemption from the Severe Weather Emergency Recovery (Waste Minimisation) Order doesn’t actually close till next year, in June? Does that mean that there is an increase then and they have to pay that increase? They are exempt from the old charges, but when these new charges come in, in July this year, it means they actually have to pay those new increases.

As the Minister is receiving official advice, I’ll step through that again. Last year, floods, cyclone—as a part of the emergency response, there were a number of Orders in Council that were released, including one called the Severe Weather Emergency Recovery (Waste Minimisation) Order 2023. That has a sunset clause for 24 July 2025. So, basically, people who need to dispose of cyclone- and flood-related waste are exempt from the waste levy up to 24 July 2025. My question is—because I couldn’t see a savings provision—actually whether there needed to be one, first of all. Second of all, if this bill comes into force, will that exemption only apply for the old charges, not the new charges, which are coming under this bill, given that the order doesn’t actually have a sunset clause until 24 July 2025?

Hon PENNY SIMMONDS (Minister for the Environment): I’ll have to get further information for the member the Hon Barbara Edmonds on the Orders in Council, but can I just bring to the member’s attention that the amendments in here enable a waiver of the levy fees for local authorities for remediation work. So there is the ability for that waiver to be granted.

GLEN BENNETT (Labour): Mr Chair, thank you so much. As a member of the Environment Committee, I felt it was important—I’ve been seeking the call for almost 2½ hours now, and it is important for myself and, I know, others in the Environment Committee here—for us too to, I guess, prosecute this, because we didn’t have the opportunity to do it in select committee. So it is good to be here and to be standing. I really appreciate contributions from the honourable Minister. And I’ve been reflecting, actually, and my question is related to your electorate, honourable Minister, because I know that, for you, there are some real challenges and there are some real challenges in terms of waste. Obviously, you have some big industry and some big business. You look at Tīwai Point, which everyone knows, but you also have some good opportunities there, which is what I want to, I guess, prosecute today. You’ve got the SJ Timpany Landfill, which obviously is making good on dealing with industrial waste and waste that needs to be rid of.

My colleague Camilla Belich and the Hon Kieran McAnulty have talked about the emergency management space, but I need to take a different angle on this, because I still haven’t quite got it clear. And just to support, I guess, making sure again we get this right, because, as many on this side have said, we need to make sure, if this is going to pass, that we actually have it right so that when the next emergency happens it is fit for purpose.

Now, I want to reflect, because it happened several times back in March and April, Tuatāpere, which, obviously—is that part of your electorate? I’m not sure—

Hon Penny Simmonds: It is indeed.

GLEN BENNETT: —but it’s close by.

Hon Penny Simmonds: No, it is.

GLEN BENNETT: It is in your electorate. And obviously there’s been a huge issue there in terms of contamination with products that have been buried, have been put away—things like explosives, asbestos, and hazardous materials there.

Now, in amended section 5, and the emergency having the same meaning as the Civil Defence Emergency Management Act—the thing is that the Civil Defence Emergency Management Act talks about leakage or spilling of any dangerous gas or substance. Now, the thing is this is an ongoing issue. And at Tuatāpere this is an ongoing challenge that they have. Is it an emergency or is it just an ongoing issue because of climate change and because of sea levels taking away from that? So I’m trying to understand in terms of where this is and where it fits in in section 5, but also, of course, in new section 38A. Because earlier when you spoke to us, you mentioned that section 38A(2)(c)—you talked about referring completely to emergency waste. But obviously the waste at Tuatāpere is, in my mind, both emergency and is just ongoing issues that need to be dealt with in terms of remediation and how that works.

The other one I want to acknowledge as we come around, obviously, is Bluecliffs in your electorate. And congratulations. You got some good money from the Government earlier in the year—$1.35 million towards the Bluecliffs landfill clean-up. And again, the challenge is because we talk about pandemics and where that fits in, we talk about climate change, we’ve obviously spent a lot of time—and people might think it is repetitive, but I think it’s really crucial because why not spend another hour here, why not spend another couple of hours here to get this tight, to get this right, because we don’t want to be scrambling when the next earthquake, when the next sea-level rise, when the next storm comes through, and it actually isn’t fit for purpose.

Yep, the other side of the Chamber are moaning at us and saying we’re just dragging it out, but it’s actually not on us; it’s on your bosses in terms of they should have thought through this in terms of making sure that they got it right before they brought it to the House, or at least they took it to select committee. So, coming back to the question, it’s around section 5, “emergency has the same meaning as in section 4 of the Civil Defence Emergency Management Act 2002”. Again, a leakage or spillage emergency or the leakage or spillage which is just continuing as a regular part because, obviously, of past wrongs that were done and not remediata—remeni—remediating. I can’t even say the word on that.

So that is my question to the Minister. I appreciate you spending time to thoughtfully consider it. Congratulations on what you’re doing in your electorate to clean up parts of your electorate, and I look forward to your answer.

Hon PENNY SIMMONDS (Minister for the Environment): There is a danger in quoting examples from the electorate that the Minister is in. Can I let the member know that the Tuatāpere and Bluecliffs entity is one and the same, and that no explosives were in that site, but it was, indeed, a vulnerable site—one of a number that received over $6.6 million of funding. That was the Southland site, the South Canterbury one, Nelson, and Tai Rāwhiti. And I have indicated that dealing with these sites will be a priority for me. This legislation, this bill, enables those vulnerable and contaminated sites to be funded. And I have stated it as a priority that they will gain more funding. The local authorities also will benefit from being able to have their levies waived from undertaking these remediations. So the bill in fact supports, enormously, addressing these contaminated and vulnerable sites.

JAMES MEAGER (National—Rangitata): I move, That debate on this question now close.

STEVE ABEL (Green): Thank you, Mr Chair. I appreciate it. I got an email late last night from—

James Meager: From the Labour Party?

STEVE ABEL: It didn’t happen to be, but from a gentleman who is in the environmental advocacy space, a guy by the name of Barry Weeber who works for ECO.

Now, in lieu of a select committee—it’s not a very long email, but he makes some very good recommendations—given he won’t have any right, nor will any member of the public have any right to submit on this, I thought it might be useful for the Minister to ask some of the questions that he puts. “I just happen to realise when I opened the Parliament website and found the waste minimisation bill is going through Parliament. I can’t fathom why this bill has to go through all stages under urgency. I agree with the comments”—and I won’t repeat them, because we’ve canvassed them, about the waste levy activities that reduce environmental harm being too broad. He says, “All these go way beyond the reason that the waste levy was established.” He also makes a very specific point on section 38A “the use of the word ‘may’ (2) should be ‘shall’ in both places. It is also a bit rich”—he goes on—“not levying current mining operations for cleaning up contaminated mine waste sites.”

That is a question for the Minister. It has been asked but it has not been answered. Is it not more appropriate? Why should those dumping construction and demolition fill be paying for mine waste clean-up? That’s a question for the Minister. Why are those who are creating tailings dams, cyanide-laden tailings dams, not being charged a levy for clean-up of contaminated mine waste? That is another question for the Minister. He concludes with “I hope you have some success to change this.”

And my final question is: are there amendments that the Minister will seriously consider, or has a decision been made by the coalition Government that they will not accept any amendments on this waste minimisation bill. Thank you.

TIM COSTLEY (National—Ōtaki): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

CHAIRPERSON (Greg O’Connor): The question is that Kahurangi Carter’s tabled amendment to clause 4 be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendment not agreed to.

CHAIRPERSON (Greg O’Connor): The question is that the Hon Rachel Brooking’s tabled amendments to clauses 4 and 9, replacing “or increase environmental benefits” with “caused by waste”, be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendments not agreed to.

CHAIRPERSON (Greg O’Connor): The question is that Reuben Davidson’s tabled amendment to clause 4, replacing “society” with “community”, be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendment not agreed to.

CHAIRPERSON (Greg O’Connor): The question is that the Hon Rachel Brooking’s tabled amendments to Part 1, changing the scope of activities funded by the waste disposal levy to include remediation of contaminated sites, be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendments not agreed to.

CHAIRPERSON (Greg O’Connor): The question is that Steve Abel’s tabled amendments to clauses 9 and 10 be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendments not agreed to.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Part 1 agreed to.

Part 2 Amendment to Waste Minimisation (Calculation and Payment of Waste Disposal Levy) Regulations 2009

CHAIRPERSON (Greg O’Connor): Members, we come now to Part 2. This is debate on clauses 13 and 14, “Amendment to Waste Minimisation (Calculation and Payment of Waste Disposal Levy) Regulations 2009”, and Schedule 2. The question is that Part 2 stand part.

Hon DAVID PARKER (Labour): I want to explain to the Minister, because I suspect she doesn’t know the history, how we’ve got to where we have in respect of levies on solid waste. The waste minimisation legislation was brought into being as a consequence of an initiative by the Greens’ Nandor Tanczos and the Helen Clark - led Labour Government. The Government took over his member’s bill, and the Waste Minimisation Act was passed. At the time, the levy was set at $10 per tonne of waste going into municipal class 1 landfills and none of the others.

There was a change of Government, and the subsequent John Key - led Government did nothing to extend the scope of it to other landfills or to increase the levy beyond $10. The Jacinda Ardern -led Government came in. Eugenie Sage was the Minister—a good Minister—and Local Government New Zealand (LGNZ) had passed a resolution saying they lacked the money to build the infrastructure needed to reduce waste going to landfill, and New Zealand has amongst the highest per capita levels of waste going to landfill in the world. It was a shameful position that New Zealand was in.

So Eugenie Sage came to me, as the then Minister for the Environment—I was the Minister, she was the Associate Minister—and said that we should do something about it. I took it to Winston Peters, and Winston Peters said, “Let’s do this properly. Let’s not just tamper with this; let’s do it properly.” Therefore, as a consequence, the breadth of landfills covered was increased, as set out on the back page of the bill—Schedule 2, which is being updated here—so that construction waste landfills and other solid landfills pay a lower rate, but actually still higher than the $10 that was applying to municipal waste at the time, and, on the back of the LGNZ resolution from local government, we thought, “We can carry this, and we can maintain a social and political consensus that this needs to be done.”

We then proposed increases that have, effectively, increased this levy already by about 600 percent. Who can ever achieve that? You’d think, “How was that achieved—how was that achieved?” Well, Minister, this was achieved by political and social consensus. How was that achieved? Scott Macindoe knows how this was achieved.

Tom Rutherford: Who? Who?

Hon DAVID PARKER: Scott Simpson, sorry—Scott Simpson. Sorry, Scott. I went to the Hon Scott Simpson, and I said, “Let’s not politicise this, and we can do this and meet the need, and at least one area of environmental policy will be reasonably well funded to clean up the mess that we as humans have inflicted on our corner of this planet.” It’s worse than just about any other corner of the planet, in terms of volume. Our dumps have managed a lot better than a lot of other countries, but there’s still a lot in them. So I went to Scott. I then played all the other angles. You know, one of the reasons why National doesn’t play up on the waste management space is that the Prime Minister’s brother is very senior in the waste management industry—and he’s a good man. He’s a good man.

When there was more money coming into the Waste Minimisation Fund, one of the things we funded was a million-dollar machine that’s in Auckland, in the private sector and, in part, funded by Government money, to chop up computer screens and old TVs. It’s an incredible thing. It chops the glass and the plastic up into small parts. It has all these optical sorters and uses air to flick off these little pieces that are about a couple of centimetres out. It sorts them into all of the different components—a fantastic thing. Those things used to go to landfill. They are now, through the Waste Minimisation Fund, sorted, and those bulk remainder materials are re-exported to the rest of the world, and they’re reused rather than ending up in New Zealand landfill—smart policy.

The Prime Minister’s brother—or it might be his brother-in-law—was there, and I went to him, and I said, “Look, we’re doing this. We’ve got Local Government New Zealand on our side. We’ve got a political consensus, and that’s always a hard thing to achieve in respect of significant fee increases, even though local government is calling out for them. Can you just have a whisper in his ear and make sure he doesn’t ruin this, please?”

CHAIRPERSON (Greg O’Connor): Mr Parker, just, families—I’m aware you’re being positive, but let’s just stick to the—

Hon DAVID PARKER: No, I’m not improperly bringing in a family. This is a positive story. This is how soft politics works in New Zealand, and this is how you achieve real, enduring change. I’m grateful to him, and I’m grateful to all of the other parties—New Zealand First, the ACT Party, the Green Party—who have cooperated in this so that we’ve achieved this. Now, who does the money come from? It comes out of the pockets of the businesses and the people who send stuff to the dump. That’s who’s paying for this, and so you’ve got to be very careful to maintain this consensus, rather than hiving off the money for things that it wasn’t originally meant for.

So my problem with this change to the Schedule is—I want the Minister to stand up and justify how money coming out of Wellington City or any other city can be used for cleaning up mines on the West Coast or river pollution, which is now within the route that could have been caused by—and I see the ACT member, the Associate Minister for the Environment, here. It could be utilised for those purposes, those other funding lines having been scrapped. That puts at risk this social consensus that we’ve managed to achieve to actually get the revenue for the infrastructure, in this infrastructure-short country where local government can’t pay for their share of the infrastructure. This puts at risk that consensus that’s led to this enormously successful scheme doing what it needs to do to minimise waste. So, Minister, I actually don’t oppose these increases. What I oppose is that you’re putting at risk the consensus that lies behind this.

For some local governments, it’s been hard for them too. So how, Minister, do you justify these increases in fees going for management of what was not previously within the ambit of the legislation? Essentially, before this, it was solid waste, and, sure, we’re up for legacy landfills and we’re up for the policy work for product stewardship schemes, as I explained in an earlier part of this debate. But why would you put at risk that consensus, which has been so carefully arranged in the manner which I have described?

STEVE ABEL (Green): Thank you, Mr Chair. I had a very excellent experience some many years ago in my capacity as political liaison for Greenpeace where I would attend the Bluegreens conferences, which are excellent, I have to say, often. One of the more impressive ones was where it was held in Raglan—

Tom Rutherford: I was there.

STEVE ABEL: You were there. Scott Simpson was there. A lot of people were there. We were taken to the very excellent Xtreme Zero Waste facility in Raglan, where they are diverting, I think, around 90 percent of waste from going to landfill—incredible recycling, a dump shop, and great composting facility. That is the sort of innovation, improving of what is possible with waste, that should be being funded by a levy.

We support a waste levy. We support an increase in the waste levy, and I believe my colleague Kahurangi Carter will speak to how much that increase should be. It should, in fact, be greater than what is being proposed. But, as Led Zeppelin say, if the levee breaks, we’ll have no place to stay. What this legislation does by its allocation—that seemed to be a very in-joke that no one got!

CHAIRPERSON (Greg O’Connor): We were laughing within, Mr Abel.

STEVE ABEL: Thank you. I appreciate that, Mr Chair. With this allocation of that levy to things beyond the purpose for which the Waste Minimisation Act was originally set up—with the allocation of that levy to other things—it will be literally frittered away on things that are not to do with waste minimisation. So on the one hand, you’re increasing the levy, but on the other hand you’re vastly broadening the category of things that it can be spent on. Therefore, the increase, at $5 a year, is barely beyond the increase in interest. It barely stays ahead of interest rate increases at $5 a year. It needs to be more.

The impact of it being allocated to so many other purposes is that it is near nominal. In fact, you may well find—because 50 percent of it is going to go to councils, as it should, but that 50 percent that is open to the discretion to be spent on other things, such as remediating mine sights—suddenly, that we may even get less money spent on waste minimisation, because the category is so broad for how it can be spent.

So we submit that the levy should be greater for the categories of waste “construction and demolition fill” and “managed or controlled fill disposal”. It should be greater than a $5 increase—and my colleague Kahurangi Carter will speak to the exact dollar amount. But we should not increase the municipal disposal rate more, because it is not fair that general members of the public, who are disposing of their municipal waste, should be being pinged for the cost of cleaning up a mine site, as this legislation currently proposes to do. Thank you.

Hon PENNY SIMMONDS (Minister for the Environment): I’m very mindful that we traversed the broader scope of the bill in Part 1, but I note also that the Green Party would like a much greater increase in the levy rates. We on this side are very careful about the impact of any increases on the cost of living crisis that businesses are dealing with and not wanting to also impose significant costs on to the building and construction sector in a housing crisis. So we are happy with the rates as they stand.

Can I just note—because the member is so fixated on mining—that mines have remediation as part of their conditions under the Resource Management Act.

CHAIRPERSON (Greg O’Connor): I’ll just note that we’ve had two very good speeches that have gone a little beyond but have provided good context. But from here on we’ll be reminding members of the relatively narrow focus of this Part. The Hon—

Glen Bennett: Rachel Brooking.

CHAIRPERSON (Greg O’Connor): Rachel Brooking.

Hon RACHEL BROOKING (Labour—Dunedin): Thank you, Mr Chair. It’s much easier for us. You just have the simple name, and often we all call you “Madam”!

CHAIRPERSON (Greg O’Connor): Quid pro quo!

Hon RACHEL BROOKING: Yeah, exactly! So we’re talking here about how Schedule 2 sets the levied rates. These are actually in regulation. They are being amended here in the primary legislation. It’s not necessary, but the regulation does run out in June 2025, so I understand the logic of putting it in the primary legislation. So that first column on the table is as per the current regulations; there’s no change to that. Then we see it does go up.

Given the speeches that we’ve had, I wonder if the Minister has thought of adding different disposal facilities—we’re not even calling them “disposal facilities”—or considered levying, say, mine sites. That could be included here, somehow. I know she just mentioned the Resource Management Act and conditions of that, but, of course, that only applies to recently consented things, or newly consented issues rather than older ones, unless it’s been reviewed.

Going from David Parker’s point about social consensus—and I note that the Environmental Defence Society has a conference coming up, and often there are conversations amongst members about these issues at those. I can’t comment on a Bluegreens conference, because I’ve never been to one of those. Noting the Greens’ amendment here, in the name of Kahurangi Carter, that does really make these levies a lot bigger. Has there been much work into considering how much they should be raised by, given that it’s an amendment to regulations normally? Would the Minister commit to talking with other parties about what those levies should be via regulation? Is that something she might want to do?

My last question is, really: why is this bill here under Budget urgency? Is the only reason because the Government is going to rely on this fund for things that go well outside of waste? The legislation already goes, via regulation, to 30 June 2025. The supplementary analysis report talks of the extra $171 million generated over the next four years. I mean, that is my question. Are we in urgency here on a Saturday lunchtime because the Government is relying on that $171 million, or are there other ways to do this, and could we, in fact, send this bill to a select committee and have the discussion that we would have in the select committee? I know the levies are normally done in regulations, but this is a useful discussion to have about what they should be and where that social consensus is for them, and I invite the Minister to make some comment and commitments.

GLEN BENNETT (Labour): Kia ora, Mr Chair. It’s my second time rising and, yeah, it is a challenge to listen. I want to come back to the Minister. My first question, actually, is a really simple one, related to the Hon David Parker. He did ask you a question and I would really like to hear the answer to that. But I think it was around consensus. You know, he obviously gave a really good history and a good story about how this came about, but for us here in the Labour Party, it would be nice to know—and I guess it follows up on Rachel Brooking’s question around why we’re doing this in urgency. So I wonder whether I could have an answer from the Minister around how she could consider consensus on this.

And, secondly, which I guess is totally related in terms of why it is in urgency—in Part 2 here, as we look at the “Amendment to Waste Minimalisation (Calculation and Payment of Waste Disposal Levy) Regulations 2009”, I want to come back. I’m spending a lot of time reading the supplementary analysis report, and there’s a lot in here about the why—why Cabinet has made these choices. And I guess I need to know and understand a bit of that process. Obviously, there has been some consultation. We can see here there have been some stakeholder views put in. But, of course, those stakeholders don’t get to have the full experience of sitting in front of a select committee and putting in thoughtful submissions that we as the Environment Committee would have considered.

In this analysis, it talks about fiscal savings for the Budget. And, I guess, as we look at the calculation table, it concerns me that they directly mention Budget savings to ensure that, obviously, they find some money somewhere else. And then I flick through—and there’s lots of bits of paper here for me to rustle through. I guess, when we look at the schedule of payments, the document makes it really clear that that table is an increase, but the broadening of what the money is for means that there will be assumed consequences from it. And I want to just mention that it talks, on page 11, about the objective to “maintain the efficiency and effectiveness of the levy regime”. It has the potential, the way the bill has been drafted, for the calculation of the waste payment to be nearer a tax rather than a levy. And that’s, I guess, what we want to understand. It talks about, on page 13, the Treasury’s Guidelines for Setting Charges in the Public Sector, when it comes to levies. But, in a way, the levies may be more akin to a tax.

I really want to make sure that this is a levy, in terms of the schedule around the calculation of the payment, and then come back to what the Hon David Parker asked around consensus, because we want to be constructive and we want to make sure—as I said in the previous section of the legislation—that this is tight and right so that it works well. And then, again, I want to support my senior colleague the Hon Rachel Brooking in terms of making sure—you know, could we maybe consider that this is referred to a select committee and taken out of urgency, in that?

So, again, Schedule 2 around the levy rates—how does that work? As said in this document, there is the potential of it being closer to a tax than a levy. Are you confident you have that right? And, then, how do we work at building consensus? Thank you, Mr Chair.

Hon PENNY SIMMONDS (Minister for the Environment): Thank you, Mr Chair, and I thank the Hon David Parker who gave us the history lesson on the levy, as it came in from back in 2009. Can I just say there were discussions with the Green Party, prior to the amendment bill coming into the House, regarding the appropriate levy rates. It would have been very difficult to have come to a consensus given the extreme increases that they wanted to see in what is a very difficult financial time for businesses, particularly, and households.

Can I just reflect on the member Glen Bennett, who just sat down, and his allergic reaction to the notion of savings. The financial situation this Government has been left in—certainly, it was a very responsible thing for us to do to look for savings to reduce Government spending. We do not shy away from the fact that the requirement for this to go through urgency is to enable this to take effect by the start of the next financial year to achieve some of those savings. The increase in the levy is modest to reflect what we believe businesses and households can cope with at this time. The member may not have been here—sorry, may not have heard the discussion around the levy. The levy is still a levy. It retains a link between those paying the levy and the outcomes being funded.

KAHURANGI CARTER (Green): Thank you, Mr Chair. I am honoured to be speaking on behalf of my tabled amendment here, which is looking at clause 14 and the actual levy rates for these three different categories: business and for our households.

We in the Green Party agree that the cost of living for everyday Kiwis is terrible and it’s only going to get worse under this Government. So we need to be really serious about waste minimisation. The Minister has talked about New South Wales broadening their scope of environmental activities. Well, my question to the Minister is: if we’re using New South Wales as an example for why we’re broadening the scope of activities, then will she bring the waste levies in line with New South Wales, which are currently $160 per tonne? New Zealand, we’re looking at $60 a tonne, so that is less than half of what New South Wales is paying for tonnage.

Now, let me just explain about industry. Industry will only invest in waste minimisation and reducing their waste to landfill when it costs more for them to send it to landfill than it does to reduce their waste. That is what a waste levy is about. We know that, at the moment, our waste levy is too low for them to be actually motivated to make those changes that we really, really need. So let’s understand that. If the waste levy goes up to a sufficient amount, industry will actually make that difference and work on their waste minimisation, and we will live up to our environmental obligations. So the waste levies should be going up, and they should be going towards waste minimisation infrastructure and projects, because we have a $2.4 billion deficit in infrastructure.

Let’s talk about what that infrastructure actually is. So my colleague here Steve Abel talked about Xtreme Zero Waste in Whāingaroa, Raglan. That is a resource recovery centre—it’s not a dump; it’s about recovering the precious resources they have mined and extracted in this exploitative, extractive system that we currently live in, and they recover those resources. We have those same things like at Wānaka Wastebusters, we have them at Ethical Waste in Ruapehu. People at the flax-roots, in place; local people, who know how to recover those resources and keep that capital within their communities. These are amazing initiatives that actually send a real message to New Zealand and the world that New Zealand will clean up its own mess.

We’re not going to leave it to our next generations to have to be cleaning up the mess that we are creating today. There’s a $2.4 billion deficit in infrastructure, and you want to take money away from waste minimisation. We need to be increasing the waste levy, and I just implore the other side to really, really focus on the interconnectedness of the world and how the world really works, because as New Zealand falls further and further behind other countries with regards to our environment, our climate action, and our waste minimisation, that is going to affect our trade, because no one’s going to be wanting to buy dirty products from dirty New Zealand. We have a clean, green image that our tourism industry—that New Zealand—relies on and that our businesses rely on, like the beautiful Ruapehu, which is a tourist industry, and we need to make sure that those precious taonga that have been gifted to us by Papatūānuku are respected.

I think that this Government really needs to go back and reflect on what the repercussions are for our tamariki for the next generation and for every generation after that, because what you are not understanding is that there is no economy without the environment—there is no economy without the environment. We need to be serious about our commitments to our next generations, to Papatūānuku, and to living in harmony with nature.

FRANCISCO HERNANDEZ (Green): Thank you, Mr Chair. I’ve got some questions for the Minister. They relate to Schedule 2, and they relate to the title, and they relate to the commencement. So I’ll just go through them one by one, starting with Schedule 2. They really relate—

CHAIRPERSON (Teanau Tuiono): If you could focus on your question on Schedule 2; this is not the debate on the title and commencement.

FRANCISCO HERNANDEZ: Yes, I’ll focus on those questions, then. My question to the Minister relates to the supplementary analysis report, page 15, where the officials go through the costs and benefits of the increases to the levy rates. So I’m just going to quote paragraph 72: “higher levy rates may incentivise more re-use of materials and less use of virgin materials, with associated impacts on natural resources and greenhouse gas emissions; reduced greenhouse gas emissions from organic waste disposed of to landfills”.

So my question to the Minister is: has the Minister had specific advice on how these impact New Zealand’s ability to meet our domestic methane targets? Have we had specific advice on that? And the second part of the question is: have you had specific advice on how these changes to the levy rates affect New Zealand’s ability to meet our nationally determined contribution to the United Nations as part of the Paris climate talks? I’ll leave it with those questions and get back to my other questions around title and commencement later.

Hon BARBARA EDMONDS (Labour—Mana): Thank you, Mr Chair. I rise to take a call in relation to Schedule 2 for the Waste Minimisation (Waste Disposal Levy) Amendment Bill. I had a previous—just a recap—question in Part 1 to the Minister in relation to existing Orders in Council that provide waivers to the waste disposal levy, and the Minister, in response to that, said that there is a waiver in the bill.

I had an additional question, but, actually, it is in relation to Schedule 2, because, then, that means, on the basis of that response that the current waivers for those local operators that were to be revoked by 24 July 2025, every operator of a disposal facility will be subject to the new fees, which are now set out in Schedule 2, until they’ve received a waiver, despite them already having a waiver under current regulations. So my question is to the Minister: when she said, “there’s a waiver in the bill”, does that actually revoke, then, the current Order in Council waiver so that they would need to apply again to get some reprieve from Schedule 2 increases?

Hon PENNY SIMMONDS (Minister for the Environment): Mr Chair, thank you. I’ve got additional information for the member’s question. So the Severe Weather Emergency Recovery (Waste Minimisation) Order 2023, which amended the Waste Minimisation Act in specific cyclone-affected parts of New Zealand and which continues to apply after 24 July 2025, is not changed by this bill. And operators of dispersal facilities within the affected local boundaries are exempt from paying the levy on cyclone and flood waste disposed of before the close of 24 July 2025. So for the exempted types of waste in the exempted areas disposed of before close of 24 July 2025, the levy does not have to be paid.

Dr LAWRENCE XU-NAN (Green): Thank you, Mr Chair. Firstly, if I may, it would be great for the Minister for the Environment to answer my previous questions—that would be great. On that note, one of the things I noticed the Minister previously mentioned is that there has been no forecasted increase in the levy, which is one of the reasons that this was introduced, as it is laid out in Schedule 2 here. I would just like to say, I think that regardless of who would have been in Government, maybe we would have seen a similar amendment bill coming through that potentially would have increased the levy and potentially increased the levy at the rate that my colleagues Steve Abel and Kahurangi Carter’s amendments have indicated.

The two questions I have for the Minister relating to Schedule 2 and this part—tied to this is the first one around levy avoidance. I want to draw people’s attention to the supplementary analysis report and, again, bring attention to the importance that we are seeing a supplementary analysis report in lieu of a regulatory impact report because of the fact that this bill is going into urgency and there simply wasn’t enough time to put together a regulatory impact statement. So, on paragraph 88—sorry, paragraph 71, here it talks about the projected levy revenue that we will be seeing as a part of this increase in the levy across all four classes. But what we see in paragraphs 88 and 89 is that an “increase in levy rates may result in levy avoidance behaviour”—particularly with “waste being inappropriately disposed of at landfills with lower levy rates”. Now, taking into consideration the other possibility you have put on the table in terms of amendments to the paper and to the levy rate, what sort of mitigation strategies has the Minister considered at this stage to reduce the chances of levy avoidance, and is levy avoidance currently factored into the projected revenue rate that we see in paragraph 71 of the supplementary analysis report? So that’s my first question.

My second question is around the community cost with the increase in levy and, particularly, the municipal disposal facility, class 1. So, on page 3 of the supplementary analysis report, we see the limitations and constraints on this analysis—in particular, I point to the section on the “Impacts”. So under the “Impacts” section, it says that “the analysis included limited assessment of the impacts of levy rate increases on certain population groups”, such as the average household, and, in particular, “the potential risk of unintended consequences and perverse outcomes … could not be examined.” So I would like to know from the Minister: what sort of strategy does the Minister have when it comes to the community impact of increasing the levy of the municipal disposal facility class 1? This is in addition to what we also see in paragraphs 63 and 66, which also speak of the fact that “This proposal has not been subject to external engagement or consultation.”, and “the sector will likely have a range of views on amendments to levy settings.”

So I think these two questions are really, really important for the Minister to clarify. The first one is: what is the Minister’s strategy around levy avoidance which could be a result of this, particularly when people will dispose of waste at a lower-tiered facility in order to get a lower rate, and has that been factored into the projected revenue? The second one is: what sort of impact assessment or analysis—beyond the supplementary analysis report—has been done on the community cost and, particularly, the household cost with the increase to the municipal disposal facility, class 1?

Hon PENNY SIMMONDS (Minister for the Environment): Thank you, Mr Chair. In answer to the questions that have been put regarding avoidance, there is additional reporting that comes in on 1 July this year. So some of that will address it. Also, I would remind the member that I have a legislative bid in—for later in the year—for wider reform of the waste legislation. We will particularly look at some of the avoidance matters around things like fly-tipping and things like that. So, along with that avoidance, I’ve given the assurance to the Hon Rachel Brooking that that would be the appropriate time to look at the local authority scope as well. So there is some additional reporting coming in, in July this year, which will help to mitigate—but there will be an opportunity to put more mitigation in as we look at that wider reform of the waste legislation.

I am trying to remember—oh, the impact. I think I commented, in either my first or second reading speech, that the amount per family was around about $5.07 per annum once the municipal rate got up to the full $75 per tonne in year 2027. So it’s a modest increase and a modest impact on an average family.

TODD STEPHENSON (Whip—ACT): I move, That debate on this question now close.

STEVE ABEL (Green): Thank you, Mr Chair, and thank you, Minister, for those answers. I just want to clarify, and ask you a question on, your comment around the cost of living, in terms of the impact on people.

For context, the current municipal disposal rate is $60 per tonne, the managed or controlled fill disposal rate is a mere $10 per tonne, and the construction fill and demolition fill disposal rate is only $30 per tonne. So, already, municipal disposal is twice the cost to your average New Zealander than it is for construction and demolition fill. That is a massive let-off for industrial waste disposal. Industrial monofill, waste generated from a single industrial process, according to the supplementary analysis report, does not get any levy at all, and those can include toxic wastes, potentially. Inert but highly contaminated soils and rubbles have only just received a levy of $10 as of July 2023.

So, right now, we are making the average New Zealander pay more for their domestic waste disposal than we are industry, by a significant margin. Our proposal in the amendment by Kahurangi Carter is not to increase any further than what you are proposing, Minister, the rate for municipal disposal, from $60—and $5 a year on upwards. We are proposing a $20 increase per year on construction fill and managed or controlled fill. Now, the crucial thing is, and the question to you, Minister, is what analysis was done—

CHAIRPERSON (Teanau Tuiono): Please engage through the Chair, not directly with the Minister.

STEVE ABEL: Pardon me, Mr Chair. The question to the Minister is: what analysis was done on the impact on reduction in waste volumes by a higher threshold of levy? Was there analysis done on that?

The core of that question matters because, as we know, in other jurisdictions, when a levy reaches a certain level, such as $150 or $160 a tonne, it drives new efforts by industry to remove waste from landfill. That’s when we start to get the actual waste minimisation effect. You don’t get the waste minimisation effect if the levy is only going to be $70 by 2026, for construction and demolition waste, significantly behind what’s happening in Australia. A $20 per annum increase gets us closer to what we need to be doing to disincentivise waste going to landfill.

The other thing to consider, Minister, in terms of the cost of living impact, is that waste is a cost and a burden on our society. What is the extent of that cost and burden, and how much more quickly can we drive it down by sending strong signals that we are disincentivising waste? If we don’t send those strong signals, we risk the waste problem being worse and we don’t get the infrastructural funding for making the change, but what’s more, of course, if the levy is effective as a Pigouvian disincentive tax, the volume of money coming from the levy goes down.

We want the income to Government from the levy to be decreasing, because that is a sign the levy is working as a disincentive. What analysis was done on the levels at which we maximise that decrease in the volumes of waste going to landfill? Thank you.

GLEN BENNETT (Labour): Kia ora, Mr Chair. Actually, I’m going to ask a question, and I know there are rules and procedures around what Cabinet can and can’t say, but it’s more about the process around the levy space. But I just want to correct the record because, in my previous contribution, actually, I made a mistake, and I want to fix it just for the sake of Hansard, who are doing a sterling job in capturing all of our amazing kōrero. I did say that there had been stakeholder engagement, but, actually, there hadn’t been stakeholder engagement on this. In my brain, I did quickly read it, so I just apologise for that. There was no stakeholder engagement on this legislation. I just wanted to clarify that.

Coming back to the question around Cabinet processes and the increasing of the levies—so, obviously, we have been talking about that a lot, and, obviously, you’re a champion of the environment, as Minister, and I’m glad to hear, as you just said, that you are putting a bid in later in the year. But I’m just wanting, I guess, to get assurance from the committee in terms of—you, obviously, can’t disclose the conversation, but there was actually work done to get these numbers right, because the numbers are obviously increasing, and, obviously, it’s really how that was calculated, understanding that work. So my first question, really, is in terms of how the Minister led on that in formulating this legislation.

I guess the reason I bring it up is because, obviously, in a usual situation, in select committee, I know that industry would have submitted in the hundreds and, potentially, thousands on this, and they all would have had an opinion on their levy. They all would have had an opinion on where it’s set and where it is. And so that’s why I just want to understand from the Minister in terms of whether she consulted with others. How did they come up with these numbers? Or did they just spin a magic wheel in the Cabinet room? I don’t know.

Secondly, around that—so getting to understand the levy—is the lead-in time and just where that fits in terms of, again, how the Minister for the Environment landed on that lead-in time, as the additional levy rates increase applies from 2025. In terms of the lead-in time, I’m hoping and guessing officials had given advice on that. I know there’s things, obviously—because you can’t just do them—well, there’s some things you can slam through overnight but other things you can’t when it comes to communications with the sector and when it comes to systems change to get the computer settings right, and those types of things. So, in terms of that lead-in time, is the Minister confident and had good advice to ensure that everything is lined up in terms of getting it right for that increase to apply from 2025?

We’ve talked a lot about social licence in the committee stage. We’ve talked a lot about working across the aisle. We’ve talked a lot about how we bring people with us. And I guess, again, if this was just dumped into the inboxes of industry, of those who are having to dispose of products, what would it be for them just to suddenly have that “Well, this starts at this date.”? But just to know that there is a clear, I guess, communication plan and that they feel that—and, for most of us who have worked in the real world, we set the date for where we want to be and then work our way back to make sure we have all our ducks in a line, all our protected ducks, all our waterways and riverways in a line and clean and green, so that we can move along and care for those ducks and support those ducks and take photos of those ducks and make sure they’re safe and protected. So that lead-in time—it’s important that we get it right.

I assume that this is going to pass. I assume that, suddenly, magically, the Leader of the House isn’t going to come bowling in here and say, “Actually, stop. We’re going to take it to select committee.” I’m guessing that’s not going to happen. So we just want to make sure—

Hon Rachel Brooking: There’s still time.

GLEN BENNETT: There is still time—there is still time—to make sure that there is a decent lead-in time so that the sector, so that industry, isn’t blindsided yet again by another piece of legislation that’s rammed through.

So just the processes that the Minister championed; the lead-in time, just to make sure we get this right, because we actually want New Zealanders to do right by waste. And, as I’ve said many a time, we want to keep it tight, and we want to get it right.

Hon PENNY SIMMONDS (Minister for the Environment): Mr Chair, thank you. I will answer the questions by the Green member Steve Abel and may, at the same time, answer—I think there might have been a question somewhere in the previous speaker’s discussion.

The calculations, yes, were done around the impact of the changes around the construction sector, based on the estimates of how much waste is produced during construction of a new build. The levy costs, by the time of getting to 2027, would increase for a home being built, for an average sized three-bedroom home, by around $46 a house, while the levy cost for disposal of materials from a typical house demolition would increase by about $206 for each demolition. I acknowledge these are modest, but given that we are in a housing crisis, we are very, very mindful of not putting anything in the way of houses being built and, in fact, are trying very hard to reduce some of the compliance costs around that.

With regard to why there is a difference between the different classes of facility, there is much greater ability for reuse and recycling of municipal waste and much less for the classes 3 and 4, the managed or controlled fill disposal facilities, where lightly contaminated materials are going in, and there is very little opportunity for recycling there. And, similarly, with the construction and demolition waste, there is increasing infrastructure, but that is certainly not as mature as the infrastructure that is there for dealing with municipal waste.

FRANCISCO HERNANDEZ (Green): Thank you, Mr Chair. I just want to reiterate my question again because the Minister hasn’t answered it yet, and I acknowledge that it might be because of some confusion between myself and my esteemed colleague Lawrence Xu-Nan. The Minister might have thought that she’d answered my question when in fact she’d answered Lawrence’s question.

So I’ll just reiterate my question again and add on a couple more. Again, my question asked whether the Minister has had specific advice on how the levy rates and the proposed increases affect New Zealand’s ability to meet our domestic methane target. And the second part of my previous question was: has she had specific advice on how the levy rates have affected New Zealand’s ability to meet our nationally determined contribution? I have two extra questions as well. We know that there are different levy rates in Schedule 2. There are three different ones: for municipal disposal facilities, for managed or controlled fill disposal facilities, and for construction and demolition fill disposal facilities.

We know that the municipal disposal facilities are class 1 landfills and that the construction and demolition fill sites are still landfills and receive organic waste. So was consideration given to equalising the rates of both of those, to align at least the construction and demolition landfill to meet the rates of the municipal disposal landfills, given that there are otherwise incentives for companies—and we’ve heard the supplementary paper refer to this as well. The ministry has acknowledged the concerns, from some submitters in a previous round of consultation, that some people might reclassify waste that should be going to class 1 landfills as construction and demolition waste so that it goes to class 2 landfills.

That is significant. Many class 1 landfills, except those that are too small to qualify, are required to have landfill gas capture technology, and class 2 landfills are not required to have that technology, which means that this rate differentiation may in fact create perverse incentives for people to reclassify their waste so that it goes to the class 2 landfills. And I’m sure that all the members of this committee who care about a clean, green Aotearoa would agree that that would be a really bad outcome from this bill. So I’m just curious as to whether there’s been any analysis or any advice done on that.

Also, because we have not had the opportunity to go to through a select committee process and there’s not been an opportunity for people to submit like they usually would, I just want to make sure I get on the record, in the Hansard, some of the stakeholder views on what the increase in this levy fund could be used for. I refer to paragraph 63 on page 14 of the supplementary analysis report. When asked what the levy revenue should be spent on, a majority of respondents indicated a preference for funding waste infrastructure, followed by compliance monitoring and enforcement and behaviour change activities—mentioned by nearly one-third of submitters. Approximately 25 percent of the submitters responded that the levy revenue should be able to be spent in line with the waste hierarchy or the top end of the waste hierarchy.

So the top end of the waste hierarchy is focused on avoiding waste altogether. The middle layer is spent on recovering waste so that we at least get some value from the waste that we do generate. And the bottom is the worst kinds of activities, which is disposal either to landfill or even below that, disposal to skyfill, which is waste incineration, which is the worst of the bunch.

The stakeholder views go on to describe how there were no comments in relation to spending levy funds on managing waste from emergency responses and no comments on administration of what the other things should be spent on. I’m aware that I’m straying a little bit back to Schedule 1, so I’ll make sure that I park myself back into Part 2 and reiterate the questions I had around how the levy rate affects New Zealand’s ability to impact our climate targets, both domestic and international commitments, under the nationally determined contributions.

Also, the new question that I asked in this area was: was there consideration or advice or any thinking around the desire to equalise the levy rates for class 2 and class 1 landfill, given the potential to create perverse incentives if these are not aligned?

Hon BARBARA EDMONDS (Labour—Mana): Thank you, Mr Chair, for giving me the ability to take a call. I do actually want to speak to both Schedule 2 and the tabled amendment in the name of Kahurangi Carter.

It’s really important that when Parliament goes through the process of either increasing taxes or increasing levies or imposing levies or taxes, there is some assessment of where the incidence of that burden lands. There is no regulatory impact statement in relation to this bill. However, I’m looking for the impact of where the incidence of this increased levy lands. I looked in the supplementary analysis report, and pages 16 to 17 have some brief comments as to the different sectors and the impact of increased levies on them—or increased taxes—and how it would impact them. The reason why I just want to step through those different sectors is because I think it’s important to provide some understanding as to where the Labour Party will vote in relation to Kahurangi Carter’s tabled amendment.

If you go to paragraph 75 of the supplementary analysis report, the first group that it looks at is “Landfill site operators, who would need to pay the higher levy costs. However”, the statement continues, “this is expected to” pass through costs on to others. So in some cases, where there is a substantial competition, some site operators may find it harder to pass all the costs on.

So then the question is: well, if there are less site operators, what’s the impact if there are less site operators because of the increased charges set out in Schedule 2 and proposed in the tabled amendment? Does that mean that we’re going to end up with more dumping of waste—construction waste or other waste; household waste—on to public sites? Because the incidence of the burden of this increased tax falls on those site operators where there is a lot of competition. They’re not able to pass the cost on, so, therefore, there will be less site operators.

The next sector that the supplementary analysis report goes through is “Producers/disposers of waste … households, businesses, and territorial authorities. Overall, the increases to levy rates are estimated to raise an additional $171 million in revenue between 2025/26 and 2027/28”. That’s compared to what would apply from 1 July 2024, so that’s quite substantial—$171 million. I haven’t calculated how much the amount would be given under the tabled amendment, but I would say, given that the construction and demolition disposal facility is recommended at $90 per tonne from $27.70 per tonne for managed or controlled field disposals and then 75—sorry I’m just reading what Kahurangi Carter’s tabled amendment says—it would be considerably more revenue that’s collected by the Crown.

But, again, going back to the landfill site operators, there may be less of them. They won’t be able to pass the operations on, so, therefore, there are just some concerns raised there about actually increasing it way too much, which is covered within the tabled amendments.

The statement also says that the “Impacts on households: while households will likely face some cost increases, this will vary depending on how territorial authorities and landfill operators charge for rubbish collection.” So we already know, right now, that local authorities are having difficulty in basically meeting their everyday operational and capital costs, hence why we are seeing soaring rates increases across the country.

For example, I’m not too sure what the Bay of Plenty increase is—I know in Porirua it’s around 17 percent and 8 percent the next year. But, obviously, depending on where it is in the country, the increases in the rates—basically this impact assessment says that it’s likely that that cost will be absorbed by those territorial authorities. But I don’t think that that’s actually going to happen, because local authorities are already telling us that they have a huge increase in rates. So the statement goes: this would be a $3 plus GST increase across the period per trailer load.

Then it goes on to the next section, “Impacts on construction and demolition and development”. Now, this is a really key part for me because the construction sector is the second largest employer in my electorate of Mana. We are already having an economic slowdown. The construction industry is already on its knees because the Government has slowed down buildings of houses, hospitals, and schools. However, what this bill then does is increase the cost in Schedule 2 for the construction, demolition, and development sector—[Bell rung] Mr Chair?

CHAIRPERSON (Teanau Tuiono): The Hon Barbara Edmonds.

Hon BARBARA EDMONDS: I’ll sum it up really quickly. So, what this talks about is that based on estimates of how much waste is produced during construction of a new-build house, levy costs for waste disposal could increase by $46 per house, while levy costs for disposal of materials from a typical house demolition could increase by around $206. Schedule 2 looks at increasing the cost for the typical house demolition to around $206.

So my question, really, is to the Minister—I’m sure the Ministry for the Environment would have given careful consideration about those incentives; they would have recommended an amount where you didn’t want people incentivised to dump into public sectors. But I just want to check with the Minister in relation to the tabled amendment by Kahurangi Carter. Was there any advice she received in relation to higher than what she has proposed in Schedule 2? Because I think that’s an important consideration for us in the Labour Party as to whether we would support that amendment. I know the Minister doesn’t have to do it, but we are really concerned about the increased cost to the construction sector—in particular for a house build that’s going to increase from $46 per house to $206 per house, so three times the cost.

If the Minister can just provide a bit of clarity as to whether they considered anything higher than the $45, which is in Schedule 2, from 2027, and, if not, then we can see whether we can support the tabled amendment or not. Thank you.

TOM RUTHERFORD (National—Bay of Plenty): I move, That debate on this question now close.

STEVE ABEL (Green): Thank you, Mr Chair. Further to the points being made by my colleague Barbara Edmonds, this is the sort of really useful conversation that I would have hoped would have happened at a select committee, where we can talk about even our differences in interpretation on the progressive side of this Parliament. That’s important. That’s what a select committee does.

So, given that we’re doing that all now, I just want to note—at paragraph 79 on page 16 of the supplementary analysis report—the current proposed levy will increase the cost to households on average by a whopping $5.10 per annum—$5.10 per annum. Now, that is such a nominal increase, and that’s the current proposed $5 per tonne. In the cost of building a house—the million dollars or more that it will cost you to build a house, at least; I mean, my goodness, hundreds of thousands of dollars, millions of dollars, to build a house—we’re talking about a very nominal figure, as you just articulated, Minister, of $43, and two-hundred-and-something dollars for the cost of the demolition.

Now, think about the value of increasing the levy on those demolition wastes. As you and I all know, many of those houses that are being demolished are 1940s, 1950s, or 1960s weatherboard timber New Zealand houses—made of beautiful native timber, often—with incredible recoverable materials, like mataī floors and kauri floors. It is stuff that we, rightly, are not logging right now, although I’m a bit concerned this Government might decide to come back to native forest logging at some point. Those things are valuable materials and timbers, but if there is not a sufficient incentive for them to be properly recovered, then they don’t get recovered. If it’s only going to cost 250 bucks to dump a whole house, then why will industry find ways to recover those valuable materials. There is no away place for waste.

So that’s my question to the Minister: have you fully considered the huge benefits of increasing that levy? I’m not convinced you’ve given me an answer to that.

I’ve got one further question, which is to an earlier question. You have an assurance, I believe, that you would look at ensuring that municipal authorities—regional authorities—are able to use their component of the levy—50 percent of it—for remediation of existing landfill sites. I wonder, given that you refused to change it in the previous part, whether you could give us a verbal assurance that those—

CHAIRPERSON (Teanau Tuiono): Please engage with the Chair, not with the Minister.

STEVE ABEL: Pardon me, Chair. I wonder whether the Minister would give us a verbal assurance that municipal authorities and regional authorities will be able to use their component of the levy for remediating landfill sites, which are dotted across this nation—old landfill sites, toxic sites that are leaching waste into groundwater. Those authorities do the heavy lifting on keeping those sites cleaned and remediated. Will you give us that assurance, Minister?

JAMES MEAGER (National—Rangitata): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Part 2 agreed to.

Schedule 1

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Schedule 1 agreed to.

Schedule 2

CHAIRPERSON (Teanau Tuiono): The question is that Kahurangi Carter’s tabled amendment to replace Schedule 2 be agreed to.

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

Ayes 15

Green Party of Aotearoa New Zealand 15.

Noes 102

New Zealand National 49; New Zealand Labour 34; ACT New Zealand 11;

New Zealand First 8.

Amendment not agreed to.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Schedule 2 agreed to.

Clauses 1 to 3

CHAIRPERSON (Teanau Tuiono): Members, we now come to the debate on clauses 1 to 3. This is the debate on clauses 1 to 3, “Title”, “Commencement”, and “Principal Act”.

Hon RACHEL BROOKING (Labour—Dunedin): Thank you, Mr Chair. Talking to the title—this is the Waste Minimisation (Waste Disposal Levy) Amendment Bill—and given the Minister’s discussions and what we have heard is in the supplementary analysis report and why this bill is here in Budget urgency, I’m suggesting that this title should be amended to “This Act is the Waste Minimisation (Pay for Environmental Cuts) Amendment Act 2024.” I would be interested in the Minister’s comments on that.

Of course, this all goes back to the wider point that we’ve been discussing today about the extension of what the levy can be spent on. That extension is for all the environmental things. The Minister has talked, in a number of speeches, about how important it is to think in terms of a circular economy and how important it is to think of the long life of a product and the many lives their product can have, so, of course, it could be amended to something like “Activities that Reduce Environmental Harm Related to the Life of a Product”.

If that was the case, then my suggested amendment to the title would not be needed because, indeed, it would still be about waste, but this bill has gone well beyond waste, and the Minister has shown no interest in making an amendment that would fix that problem. It would be a very simple problem to fix. So until that happens, this bill needs to be renamed. I would be interested, again, in hearing from the Minister about why it is that this nexus between waste and whatever the spending is on needs to remain.

I mean, another suggested change could be because that nexus is not there, and we heard from the Hon Barbara Edmonds, and earlier on we heard from the Hon Dr Duncan Webb as well about the importance of a levy, having a nexus before it becomes a tax.

So another suggestion is, of course, that “This Act is the Waste Minimisation (Waste Disposal Tax) Amendment Act.”, because until there is the nexus, it isn’t the levy, and it’s going well beyond any consensus that has been in this waste minimisation space. It’s a consensus that I’ve been very pleased about and have hoped to continue with the Minister, with all the parties in Parliament, because it really does seem like a no-brainer, but instead this Budget is choosing to reduce environmental spending with the 7.5 percent cuts across the board.

We know, as well, with climate change that there are cuts there to all of the mitigation measures. We know that there are cuts to the Department of Conservation. Presumably, with this widening of the objective, spending could be provided to groups doing things. And we know that this Budget has been good for ferrets—it has been good for ferrets because everything’s been cut. So who’s going to prosper when we don’t have the Jobs for Nature doing pest management? It’s going to be the ferrets—other mustelids as well; not restricting it to ferrets.

Andy Foster: Stick to the bill.

Hon RACHEL BROOKING: I’ve been challenged here to stick to the bill. I’m totally sticking to the bill, because that is the point—this bill is supposed to be about waste and waste minimisation. We accept that that goes further than just thinking about what is being taken to a waste facility, that we should be looking at landfills and old landfills. We can be looking at what happens in emergency circumstances—that’s a proper thing to be doing. If that was the case and there was still that nexus with waste, then “This Act is the Waste Minimisation (Waste Disposal Levy) Amendment Act.”—that is the proper title for the Act, but at the moment it is increased too far. It is overreaching and that name needs to change, so either in the brackets, “Pay for Environmental Cuts” or, in the brackets, “Pay for Waste Disposal Tax”. Thank you.

CAMILLA BELICH (Labour): Thank you, Mr Chair. It’s a pleasure to be able to take a call in relation to this title and commencement section of this debate—only the third part of the debate that we’ve been able to have on this bill. I think often the importance of the title and commencement debate is a little bit overlooked in this debating chamber, but I think it is important to realise that the most read and considered part and the most influential part of a bill is always the title. So it’s really important that we get it right.

Hon Chris Bishop: The title?

CAMILLA BELICH: Well, yeah—it’s the thing that’s reported on. It’s the most read part of the bill. I challenge you to prove otherwise. Most people—

CHAIRPERSON (Teanau Tuiono): Engage with the Chair, please.

CAMILLA BELICH: That’s a helpful interjection, Mr Chair—you know, it’d be interesting if the Minister in the chair had a view on that. But I would think that statistically, yes, it is usually the most read part of the bill—the title. So it is important, and it’s really important that it reflects the content of the bill for that reason, because it is so influential in guiding what the public sees as the content of the bill.

We’ll all be aware that waste management, or waste minimisation, in some contexts has been used to cover a myriad of different types of roles and types of activities that people in society have. Quite famously, in fact, waste management has been used in things like The Sopranos to cover things that were not actually waste management, in terms of people’s roles. So this bill has not an exact reflection on that particular situation—I wouldn’t go anywhere near that far—but I would say that there are certain things within this bill which are not reflected in waste minimisation. So I support the amendment of my colleague Rachel Brooking to change the title to be more reflective of what it actually does.

I have a few other suggestions, as we haven’t heard the Minister for the Environment’s feedback on my colleague Rachel Brooking’s suggestion. So I would like to ask the Minister: would she consider changing the title clause to “This Act is the Waste Minimisation (Paying for Tax Cuts) Amendment Act”? Would she consider changing it to the “Waste Minimisation (Paying for Unspecified Projects in the Future) Amendment Act”? Would she consider changing it to the “Waste Minimisation (Increased Powers to the Minister) Amendment Act”? Will she consider a slight change to the title clause, with a variation on what my colleague Rachel Brooking suggested: “This Act is the Waste Minimisation and Decrease in Environmental Spending Amendment Act”? All of these, I think, would give a much better flavour as to the exact changes that have been brought in by this bill.

Of course, we’re aware that we have existing legislation in waste management. We’re aware of that because the principal Act, which is part of the clauses that we’re debating at the moment, is mentioned in this section in clause 3—the Waste Minimisation Act 2008. We’ve had a discussion in earlier parts on the history of how that came about, so we know we have waste management legislation in New Zealand. So what are we getting here? What is new? I think the title could more aptly reflect what we are actually getting.

So I’m interested to hear the Minister’s comments on that. I know other members will have some contributions to make in terms of the commencement, but my question is purely around the title.

STEVE ABEL (Green): Thank you, Mr Chair. Speaking to the title and commencement, one thing that is clear, and has been articulated by others—and I have a proposition that extends on some of the commentary that’s been made—is that this is no longer merely a waste minimisation amendment bill. It’s no longer—it is an amendment bill, but it’s no longer merely a waste minimisation, waste disposal levy. Now there is a problem, for the expectation of the public, when they are paying levies and they stray into the tax territory, is that what they’re being told they’ve paid for is actually what they’re being used for. I think it’s been very clearly articulated in the debate so far that, clearly, the broadening of the categorisation to include other things is going beyond a waste minimisation levy.

So I propose this title to the Minister: I suggest it would be more correctly called the “Financial Diversion of Waste Minimisation Levy to Mining and Dairy Waste Cleanup.” It’s a bit long, so I’m actually going to—understood correctly, it’s the “Financial Diversion of the Waste Minimisation Levy to Mining and Dairy Waste Cleanup.” Now, that is technically what it’s able to be used for, under the definitions of what it can be used for, so would it not, Minister, be more correct to give it a title that is fit for what it does? Well, that’s my question, and I’ll leave that with you, Minister.

CHAIRPERSON (Teanau Tuiono): Members, the time has come for me to leave the Chair. The sitting is suspended until 2 p.m.

Sitting suspended from 1 p.m. to 2 p.m.

Hon DAVID PARKER (Labour): There are two issues I want to raise in this contribution. The first is why the legislative framework no longer sets up a levy; it’s now tax. Levies are collected for purposes for which the activity is related. So if you take a levy from the solid waste sector, you should be spending it in that sector. You shouldn’t be using it for other purposes that are unrelated—for example, for dealing with agricultural pollution from non-point source discharges or for riparian planting and that sort of thing, which are unrelated to landfills.

CHAIRPERSON (Maureen Pugh): And is this related to the title and commencement?

Hon DAVID PARKER: Yes, absolutely.

CHAIRPERSON (Maureen Pugh): OK.

Hon DAVID PARKER: This is the difference between a levy and a tax, which I’m trying to explain. A levy is collected for purposes that are related to the activity for which it is collected, which in this case is waste. “Waste” is defined in the Waste Minimisation Act, Madam Chair, and I’m happy to read that out to you, because that definition does not change. It’s set out in the definition clause, clause 5: “waste”—(a) means any thing [that is] disposed of or discarded; and (b) includes a type of waste that is defined by its composition or source (for example, organic waste, electronic waste, or construction and demolition waste), and (c) to avoid doubt, includes any component of the element of diversion material, if the component or element is disposed of or discarded”.

So it’s clearly intended to cover the sorts of things that you dispose of in the various sorts of landfills that we have—not general pollution into the air or general pollution into the water, not greenhouse gas emissions, not water pollution—and yet, the changes that have been made by the House, at the request of the Minister, have changed this legislation. We tried to put amendments to limit the purpose that this could be put to—to waste—and those amendments were voted down by the House, essentially, by the Government members. So that’s why this should not be called a levy.

The second point is that because of that, we’re not going to fool local government on this. Local government put up with their citizens paying at municipal dumps, because that’s where all the money is collected, essentially—every cent that is collected under this levy—and already it’s a big step for them to give up half of it over to the spending of central government. They put up with that because there are some things that need central government contribution, like facilities that you only have one of in the whole of New Zealand, like—

Hon Rachel Brooking: Like glass.

Hon DAVID PARKER: Yeah, and glass schemes throughout the country and things or some of this expensive kit. But they want it all spent on waste. Now, I previously addressed the House as to how we got to the point where local government asked for this to be imposed on their local citizens, with the knowledge that it was going to be recycled into waste minimisation, including by the Government. You be a councillor now and come along and tell your local communities, “Oh, we’re going to put this up, and, by the way, it’s not going to be spent on waste minimisation. We’re going to spend it down the other end of the country, on a bit of agricultural runoff which is unrelated”—

Andy Foster: It could still be spent down the other end of the country, but on waste.

Hon DAVID PARKER: Well, yes, to the extent that you have facilities that are centralised, they have to be centralised somewhere, and they should be centralised in different parts of the country, actually. But the idea that local councils are now going to put their hand up and say, “We want to give more money over to the Government, from our people, to spend on things unrelated to us.”, is just complete nonsense, and they’ll see through the fact that this is no longer a waste levy. It’s a taxation to fill in holes that have been created in the same Budget through the Freshwater Improvement Fund, because otherwise the Government’s got no money to spend on the freshwater improvements that this country needs.

So that’s why we will be voting against this title, because it is not a levy, nor is it now about waste, as defined in this very Act. It’s going to broader purposes which are going to, in the end, undermine the consensus that we have achieved, which I think we should be proud of as a country, to do something on solid waste.

REUBEN DAVIDSON (Labour—Christchurch East): Thank you, Madam Chair. It’s good to have this opportunity to speak to an amendment which should have just landed on the Table, which is an amendment to the title. It’s on the basis of ensuring that there is as much honesty and integrity in the bill as possible. So that’s about making sure that what’s on the box matches what’s in the box, so to speak.

Hon Rachel Brooking: Or the tin, even.

REUBEN DAVIDSON: Or the tin—the tin. Thank you.

Hon Andrew Bayly: What on earth does that mean?

REUBEN DAVIDSON: Thank you. I’m so pleased that a member across the Chamber has asked for me to provide a little more detail on what the term “What’s on the tin is the same as what’s in the tin.” means, or, as another member next to me has just asked, “What’s on the box is the same as what’s in the box.” I’m anticipating that this may take me more than five minutes, but I’m fully prepared to take the time required—

CHAIRPERSON (Maureen Pugh): Only if you get to the point.

REUBEN DAVIDSON: —to explain. So just to finish the quick explanation, “What’s on the box or tin is the same as what’s in the box or tin.”, essentially, means it is what it says it is. So you don’t open the box and find that it’s not what was on the box that’s in the box, and you don’t open the tin and find that it’s not what’s in the tin that was on the tin; you find that it is what it says it is. This brings me to my amendment—

CHAIRPERSON (Maureen Pugh): Good.

REUBEN DAVIDSON: —and I would like to thank you for the opportunity to explain the amendment further. Currently, the title is the “Waste Minimisation (Waste Disposal Levy) Amendment Bill”. My amendment suggests—and it’s probably important to give a bit of background here around specifically what the bill is doing and addressing and around what these proposed amendments are aiming to do. That’s broadening the scope of the activities of the bill so that the levies collected don’t relate just to refuse and rubbish and those things that the bill had, up until this point, been intended for but in fact now shift to being able to mitigate or make good damage caused by other activities or events that have negative environmental impacts. When we start talking about that, we’re talking about chemical runoff and we’re talking about mining and exploratory activities that might happen on land and the necessary—as we all know—steps that have to be taken once those kinds of activities are carried out to clean up the damage that’s done.

We also know that recently a bill that very much is in the tin—or in the box; the same as what’s on the tin or on the box—is the Fast-track Approvals Bill. My suggestion is that if we’re going to continue in that vein—if we’re going to create bills and have bills moved through the House—and in this instance, today, at great speed, despite my contribution right now—at great speed, then I think that it’s only appropriate for us to accept my amendment, which is to change the title of the bill from the “Waste Minimisation (Waste Disposal Levy) Amendment Bill” to something a little more straightforward and a little more related to the other bill that it dovetails in so tidily behind, and that would be to change it to the “Waste Minimisation (Last-track Levy) Amendment Bill” because this bill—

Hon Member: What a load of rubbish—sit down.

REUBEN DAVIDSON: —will, effectively, become the backstop. A member across the Chamber calls it a load of rubbish. That’s a really relevant heckle to raise at this time because the load of rubbish that the member refers to won’t be able to be addressed because the resource and the funds and the revenue that are generated through the initial bill are going to be tied up in other places doing other things, to other damage that’s caused by activity that’s carried out through the fast-track bill.

So by making this a sister bill—or a brother bill, if you will; a fellow bill—to the fast-track bill, we would do that by calling it the “Waste Minimisation (Last-track Levy) Amendment Bill”, and I hope that the committee can support my amendment. Thank you very much.

RACHEL BOYACK (Labour—Nelson): Thank you, Madam Chair. Thank you. It’s a real pleasure to take a call following my esteemed colleague Reuben Davidson and what I thought was a very—

Glen Bennett: Powerful.

RACHEL BOYACK: It was a powerful contribution. It was a very thoughtful contribution. I want to take some time to talk to my Amendment Paper. I understand that we have a few more Amendment Papers, I think, that may have recently been delivered to the Table from colleagues. I think it’s a good opportunity for us to talk through some of the important details around the title and commencement date in this bill, which is a very important part of the bill that we are discussing in the House this afternoon.

I have an Amendment Paper that would replace the date for this bill to come into effect, which is currently 1 July 2024 and move that to 31 July 2024, so I thought I might take a few minutes just to explain to the House why I have thought through this date change and why the change in date would be, I think, really, really useful to improve the bill, which is the purpose of the committee of the whole House stage.

The first thing is that we’ve had quite a few discussions throughout earlier parts of the bill and in the first and second readings, about the fact that this bill will have an impact on those who collect the levies. So one of the things we want to ensure, because we have seen this before, is that when we put in place changes like this, that we actually give time for it to take effect. It’s only one month until 1 July. It’s 1 June today—first day of winter, and we’ve seen the Wellington wind today that reflects that. I think that giving some extra time is always a wise thing to do, which was one of the reasons why I thought let’s just give this another month to breathe and to take effect.

But the other reason I thought—which we’ve also discussed in our contributions, is that this date would more closely align with the tax changes that the Government’s looking to introduce. One of the unfortunate things we’ve seen through this Budget and we’re seeing through the legislation that is introduced through this Budget, including the Waste Minimisation (Waste Disposal Levy) Amendment Bill, is that the Government is not giving much. Superannuitants are getting $2 a week—giving a little bit on one hand, but on the other hand, they are doing—

CHAIRPERSON (Maureen Pugh): Can I just remind the member to come back to the purpose of her amendment.

RACHEL BOYACK: Which is exactly why I’ve said that I think we should change the date to 31 July, because these changes are going to increase costs to people who are disposing of their waste—that is what the bill does. So one of the things I think is really important is for us to consider what the impact of that might be on the people at the receiving end of those changes, which is why I’ve suggested that we replace “1 July 2024” with “31 July 2024”.

It’s not the only little change that’s coming through. We’ve also discussed, if you will, the changes to the parking ticket costs, if you don’t pay on time, and there are a few other things that are coming in. So I just think it would be good, in my opinion, for the Government to seriously consider lining these things up, because we do have a cost of living crisis—and it has been discussed through other stages of the bill the cost of living challenges that we face.

Often, we hear from people who are on low incomes having to dispose of their rubbish and their waste that actually the burden of doing that is quite challenging. Surely we would want people to have that extra $2 or $10 a week in their back pocket so that when these changes take effect, currently on 1 July 2024, but if we were to push that out, people might just have that little bit of extra cash in their bank account to be able to pay for these things.

So I thought quite carefully about the dates that we could look to here. I’d be very interested in hearing from the Minister. I think it would be wonderful, because obviously we want to be able to feel confident that these things have been considered by the Minister, and it’s very useful in a debate such as this that the Minister has had an opportunity to respond, otherwise we might need to take further calls just to clarify some of these genuine questions we’ve made.

One of my questions is also: has the Minister consulted widely and looked carefully at the impact of having this bill come into effect so soon on 1 July 2024? And would she consider there to be some benefit in pushing that out to 31 July 2024, just to ensure that the legislation can be implemented effectively? So those are my questions to the Minister. I’m really hoping that we may be able to get some answers from her. Thank you.

CHAIRPERSON (Maureen Pugh): Before I take another call, I’m just going to say there is very little new information coming. Unless there is something more relevant, I will take a closure motion.

Dr LAWRENCE XU-NAN (Green): Thank you, Madam Chair. On this, I would like to ask the Minister some questions around the commencement date. Specifically, I know that previously we have discussed potential projects and all of those things. But one thing that we have not discussed is on page 3 of the supplementary analysis report on identification of savings, which is around that this report that was being produced has not factored in the assessment of specific existing costs, such as current initiatives that reduce environmental harm or increase environmental benefits, that will fall within the broader purpose of clause 4 that we have discussed before.

So my question to the Minister is: has she considered how these current projects that would be affected by the commencement date of 1 July and that fall into the broader scope of clause 4 will be either notified, or the work has been done with them, so that they are able to receive the funding and are able to receive the support from the shift of the funding in Budget lines within a one-month period? I think that is something we haven’t touched on before. On top of that, there is the discussion that I mentioned before on whether the administrative system has done that. But that has already been addressed, so I won’t ask that.

If this is something that the Minister could clarify and if it’s something that has been considered, that would be great. But if it’s something that hasn’t been considered, I would just like to also throw the Green Party’s support behind Rachel Boyack’s Amendment Paper of shifting the commencement date, just so that that way there is sufficient time for these current projects to get the funding and to get that balance that is needed. Thank you, Madam Chair.

CATHERINE WEDD (National—Tukituki): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

CHAIRPERSON (Maureen Pugh): Reuben Davidson’s tabled amendment to clause 1 replacing “waste disposal levy” with “last track levy” is out of order as not being a serious amendment.

The question is that clause 1 stand part.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Clause 1 agreed to.

CHAIRPERSON (Maureen Pugh): The question is that Rachel Boyack’s tabled amendment to clause 2 replacing “1 July 2024” with “31 July 2024” be agreed to.

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

Ayes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Noes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Amendment not agreed to.

CHAIRPERSON (Maureen Pugh): The question is that clause 2 stand part.

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

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Clause 2 agreed to.

CHAIRPERSON (Maureen Pugh): The question is that clause 3 stand part.

A party vote was called for on the question, That clause 3 be agreed to.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Clause 3 agreed to.

Bill to be reported without amendment.

House resumed.

CHAIRPERSON (Maureen Pugh): Madam Speaker, the committee has considered the Waste Minimisation (Waste Disposal Levy) Amendment Bill and reports it without amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

DEPUTY SPEAKER: This bill is set down for third reading immediately.

Third Reading

Hon PENNY SIMMONDS (Minister for the Environment): I move, That the Waste Minimisation (Waste Disposal Levy) Amendment Bill be now read a third time.

I am proud to be presenting this bill that will enable us to be much better placed to deal with some of the environmental challenges facing us, and I think it is important that we have it in place as soon as possible.

This bill, as part of Budget 2024 legislation, expands the scope of activities the waste disposal levy can be used for under the Waste Minimisation Act 2008. In addition to minimising waste, revenue from the levy will be spent on a wider range of projects supporting the environment. It makes sense to widen the use of the levy to address a broad range of environmental impacts. This is pragmatic, practical, and will lead to direct change on the ground.

This is a worthwhile bill that will benefit communities affected by an earthquake or cyclone, benefit reuse and recycling businesses, benefit those living near contaminated sites, benefit local authorities, and benefit New Zealanders.

I would like to thank most sincerely the Ministry for the Environment policy officials and legislative drafter for all the wonderful work they have done in preparing this bill so quickly. I commend the Waste Minimisation (Waste Disposal Levy) Amendment Bill to the House.

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

Hon RACHEL BROOKING (Labour—Dunedin): Thank you, Madam Speaker. Well, it’s been an interesting Saturday morning here in the House. In the rest of the world, it’s June—but not here. I’m still wearing my Music Month badge and here we are, and the calendar is saying it’s 30 May.

We’ve been in here on Saturday morning, and I would say it’s a beautiful Saturday morning for anyone who’s beaming in from Dunedin and Christchurch, where it’s a beautiful day, but, of course, we’re here in Wellington. But, of course, we’re always excited to be in this wonderful Parliament, always excited to be scrutinising legislation. It’s much more fun when you’re making it yourself, and that is what I was doing in the last Parliament. I was working with some of the officials that the Minister has just referred to about new waste legislation, because our waste legislation is quite outdated, and we do need to do much better for product stewardship in particular. And that is something that the Minister has talked a lot about in the committee stage of the debate.

And I think, Madam Speaker—you were in the Chair for some of that, and you might have even made the point that you heard in a lot of contributions on our opposition to this amendment bill that there was a lot of focus on the extension of what the levy can be applied to, what it can be funded on, and this is for the central government half of the levy and that it can now go to anything to do with the environment, which is very wise.

We had discussions in the committee stage with the Minister, talking about the life of a product—a product can have many lives, and so it should be extended beyond what is in the current Act, the Waste Minimisation Act. I agree with that. It should apply to the landfills that we have that are contaminated sites and are causing all sorts of problems all around the country, and they’re going to continue to cause problems.

And, yes, it should also apply to emergency situations—no problem with that—but what we’re seeing is this wide extension to anything to do with the environment, with no nexus to waste, none at all with—and this is inserted, by clause 4, into section 3—“(2)(a)(ii) activities that reduce environmental harm or increase environmental benefits;”. There is no nexus there to waste. There could often be a nexus to waste, and the Minister gave some examples of that, but I also gave examples that referred to things like fertiliser running off a farm, nothing to do with waste, going into the waterways and contaminating those waterways, causing a toxic algae bloom and having fish die. That is a terrible environmental thing to happen. I don’t want that to happen, which is why we need to fund our environment properly, and that needs to happen in the Budget and needs to come from different streams that are not associated with a waste levy.

That money needs to come from either some sort of polluter-pays principle—and that’s a different argument that we could have—or a general tax, not a levy. This is a levy, and it’s related to waste, and there needs to be some nexus with that waste. Hence I proposed an amendment—the Greens also proposed amendments—that would have fixed this problem and provided that nexus, but the Government very clearly does not want to do that because they want to have some availability of this fund to pay for things that should be coming from a general tax.

And why they want to do that is because they’ve cut so much in this Budget from the environment. We know the good work that Jobs for Nature has done and the important work that was happening in the Essential Freshwater package. Those things have been cut, as well as the 7.5 percent cut generally throughout the Ministry for the Environment. That is shameful when the environment is so important to our economy. It is just so short-sighted to not be spending the money to prevent pollution from happening in the first place and to do the remediation of it.

This, of course, is in the context of all else that is happening in the environment at the moment. We had, right at the start of this term, the repeal of the Spatial Planning Act, which would have done much better long-term planning for our infrastructure and our environment. We’ve also had the repeal of the Natural and Built Environment Act, which was looking at environmental outcomes and trying to move the economic activity in the planning system away from the bespoke consent, by consent up the system to the plans and national directions to save everybody money and time, and to do better for the environment as well. That’s gone.

What have we got instead? We have a fast-track bill and the purpose of that bill overrides all that other legislation that provided for protections for the environment. That is what the bill does. We come here to question time, noting that we’re not having another question time for some time, and the Prime Minister will say the fast-track bill is going to do better for environmental outcomes. I can only conclude that he has not read it—

DEPUTY SPEAKER: Except that this is not a discussion on the fast-track bill. So can we come back to the—

Hon RACHEL BROOKING: Well, it’s—

DEPUTY SPEAKER: Well, can we link it, please, at least. Thank you.

Hon RACHEL BROOKING: The fast-track bill has a purpose to facilitate development. That comes before any environmental protections. There need not be any environmental protections in the way that that bill works. It’s totally linked to this bill and totally linked to the Budget, because there will be more environmental pollution and there will need to be more public funds spent to clean up that pollution. And those public funds—well, they should never have to happen in the first place—will need to come from a tax, not from a levy where there is no nexus.

That is the point—again, this is about a waste disposal levy. There is no nexus here. We had a discussion during the committee stage, as well, about the purpose of the Act, and when we put it to the Minister that there should be some nexus, she warned that you’ve got to be careful what you wish for here because the Waste Minimisation Act also provides for product stewardship schemes for things like fluorinated gases, and that’s totally correct. But the product stewardship parts of the Waste Minimisation Act 2008 are not in Part 3, which relates to the levy. They are in another part of the Act where the general purpose of the Act, which doesn’t change, is still to encourage waste minimisation and a decrease in waste disposal in order to protect the environment from harm and provide environmental, social, economic, and cultural benefit.

So any amendment to the amendment in this bill would not have harmed any potential product stewardship scheme for fluorinated gases , and I was encouraged that the Minister made that particular reference because that would be a very good thing to have some movement on, and I hope that she is doing that.

This bill could have been a good bill. Some things that it does are in the regulations at the moment. The regulations set out what the levy is, and they were always going to end in June 2025, and, of course, if we’d been in Government there would have been an amendment to the regulations to extend it out to set the fee. We’re doing that here in this bill, and that’s a fine thing to be doing, but it doesn’t need to be in Budget urgency. The only reason this bill is here, on whatever day it is, in urgency is because of all the cuts in the Budget to the environment, and the Government is desperate to still do some of that spending and so they’re looking for ways to find some money, and the only way they’ve been able to find some money is with this waste minimisation disposal levy. It’s not a levy—this is now a tax. And it’s a cynical move on behalf of the Government to try and dress it up as something green. It is absolutely not. It is the total opposite and it’s totally consistent with the terrible fast-track legislation and everything else we’re seeing from this destructive Government.

KAHURANGI CARTER (Green): Thank you, Madam Speaker. Today we are here talking about waste minimisation and, in particular, the waste disposal levy. Now, our children deserve us to be really serious about climate action, about reducing waste, and about protecting our environment, and this Government is completely unserious about protecting the environment. It is all slash and burn.

Now, sitting here on a long weekend, I know that the other side and all of us here would rather be with our families. I just called my teenagers to let them know that I won’t be seeing them for a while. But we are here, even though we know the Government is going to push this bill through. And I think, why are we here? Why are we here fighting this when we know that they’re going to just push it through without that public consultation, without the select committee process? Well, we are here because it is our job to be the voice for the communities who didn’t get a chance to talk in select committee—the ones who this bill most affects. And it will be on record in the Hansard, and I am so proud of that, and that is why I am prepared to give up time with my family because we are paid to be here for the New Zealand people. And it will be on record in the Hansard that we fought for our next generation so that our tamariki aren’t having to deal with the waste that we are not being serious about dealing with today. So I’m happy to be here.

New Zealanders care about waste minimisation, and they deserve a Government who cares about waste minimisation as well. We have a massive waste problem in this country—1.76 billion plastic containers and bottles per year, 17.5 million tonnes of waste per year, overflowing rubbish bins, plastic pollution littering in our rivers. But what this Government wants to do is slash and burn funding for other areas of environment, which my colleagues here have spoken about, and take that money away from waste minimisation, which has a $2.4 billion infrastructure deficit. That deficit means that we are moving away from resource recovery.

I’ve talked about why resource recovery is so important. Resources are finite. Resources are finite and we are just throwing them into a tomb which is our landfill. When we value those precious resources, we invest our waste levy into bold solutions, into solutions that actually make a massive difference for everyday New Zealanders because it’s about system change. It’s not just tinkering with it around at the bottom; it is taking our waste problem seriously.

Now, Minister Simmonds in the committee of the whole House talked about New South Wales as an example of why we should broaden our definition of what this waste levy can be used for. Well, if the Minister is really serious about us comparing ourselves to New South Wales, then she would have accepted—the Government would have accepted—my amendments to increase the waste levy. Because at the moment, New South Wales is sitting at about $160 per tonne. In New Zealand, we’re at $60 per tonne. So you just have to do the maths there. You cannot compare us to a place that is over double the waste levy.

New Zealanders need to come in line with other countries like Australia and the UK, who are putting waste minimisation at the top of their priorities. So what needs to happen in this bill—and I really, really implore the other side to really think about the legacy that will be on record for the future generations when you continue to just let this planet burn. We can make a meaningful impact so that we are not stealing the futures of our tamariki, so that they can have the legacy of abundance that is their birthright, and so that you are putting their futures over a few quick bucks for landlords.

This bill has huge implications for New Zealand. It is not a pragmatic approach. It is smoke and mirrors. And just because you say you care about the environment, we can actually see that actions speak louder than words, and your actions are speaking very loudly today.

DEPUTY SPEAKER: Please don’t use the word “you”.

KAHURANGI CARTER: Thank you. And the Government’s actions are speaking very loudly today.

DEPUTY SPEAKER: Thank you.

KAHURANGI CARTER: Now, on this side of the House, we actually have vision. We have a vision for a future where our kids can live on a livable planet, where they can walk to school and there’s fruit hanging from the sidewalks, and they don’t need to go and spend hundreds of dollars on fruit and vegetables every week because it is just everywhere. And do you know what? That is what we can achieve.

Just like up in the Far North at Roma Marae—a very, very remote part of New Zealand which has a lack of waste infrastructure and not that many shops. So what the community did, because they were resourced by this levy, was bring together the environment hub. They brought together the Community Business and Environment Centre, they brought together Para Kore, they brought together the Panguru kura to all come, because communities actually know the solutions that they need for their communities. They came together. We talked about waste minimisation. We talked about solutions. And together with the community, with the businesses, we decided that, actually, something that would really help with waste minimisation would be growing a food forest. Now, that was three years ago, and that food forest now is providing kai for the tamariki who were there helping grow it.

And these are the initiatives that we need to be investing in—local initiatives. And when we understand that New Zealanders care about Papatūānuku and New Zealanders care about our children’s futures, New Zealanders want this Government to take climate action, and they want the New Zealand Government to take plastic pollution seriously.

This bill should never have been brought in without consultation. I spoke yesterday to the Zero Waste Network, I spoke to the founder of Wānaka Wastebusters, I spoke to the founder of Para Kore, I spoke to the founder of The Rubbish Trip, and all of them say that they want to be heard on this matter. These are the experts who have been doing this work since way before it was cool. But New Zealanders know that waste minimisation is cool. That is why they are out there doing the work, and our Government needs to stop putting all the responsibility for waste minimisation on the people and start being serious and looking at actual system change.

When I worked at the Ministry for the Environment, I worked in strategic partnerships. That was where we were able to see community, we were able to see business, we were able to see Government come together and work in partnership. Even if we had different worldviews, we were moving towards the same goalpost because we were serious about waste minimisation, and that is where that vision is. It lies with everyday New Zealanders, it lies with community, it lies with the businesses, and the Government needs to come to the table as well. Because when we all put our heads together, when we come up with innovative, clever solutions, we can make a real impact and reduce waste in this country—1.76 billion plastic containers and bottles per year; that is not good enough. That is not good enough for our kids and their legacy of abundance that they deserve.

I want to talk about why it’s so important to me that my children and their children and every generation after can live on a livable planet and can have everything that they need to thrive. That’s because nature, Papatūānuku and Ranginui, provide us everything we need to sustain our lives: mind, body, and soul. So we need to do everything we can to respect and protect Papatūānuku, and that is what waste minimisation is about. It’s about waste not, want not, it’s about dealing with our own rubbish so that our tamariki and future generations aren’t living on a burnt planet.

CAMERON LUXTON (ACT): Well, that was a vapid speech from Kahurangi Carter. This bill provides incentives to reduce waste through a levy. It expands the scope for activities which can be supported to support positive environmental outcomes and, therefore, social outcomes, today and into the future. I commend this bill to the House.

ANDY FOSTER (NZ First): I agree completely with some of the things which have been said around the importance of waste minimisation, the importance of reduction, reducing, and recycling. We also all agree, I think, about the importance of restoring and looking after the environment.

I think the Opposition have two key issues. One, which they’re clearly confused about, is: do they want the levy to go up or do they want to keep it down? They seem quite confused about that. The second thing I’d say, in terms of that levy, is that Kahurangi Carter talked about 1.6 billion plastic containers, and, of course, those got put on a policy bonfire by the Labour Government at the beginning of February last year.

The other thing to mention is that we have an infrastructure deficit—yeah, we agree with that. But we have an infrastructure deficit across every single class of infrastructure, whether it’s roads, whether it’s railways, whether it’s water, or whether it’s landfills. We have an infrastructure deficit right across the board, and that is one of the reasons why, in this Budget, we have $1.5 billion to fix some of the infrastructural deficit in education. I commend this bill to the House.

Hon PEENI HENARE (Labour): To te Whare. First of all, Madam Speaker, if you’ll indulge me: tuatahi māku, ki tōku whāea ki a Moana Sinclair kua riro atu ki roto i te rangi kua pahure ake nei. Ki tōku whāea ki a Hinerangi Puru kua riro atu ki te pō. Kotahi tonu te kōrero ki a rāua tahi: haere mai hāere.

[Firstly for me, to acknowledge Moana Sinclair, who has recently passed away. And to my aunt Hinerangi Puru who has travelled to the night. There is only but one thing to say to you both: welcome and farewell.]

First, I wanted to acknowledge Moana Sinclair, a lawyer and a staunch advocate for Māori rights, who, sadly, passed away in the past two days, and also Hinerangi Puru, who, for many of us, and all of us that have been to Waitangi, is one of those special kuia who you know where she stands on matters—she’s very direct and very upfront about how she feels.

Why is it important to acknowledge both of them, but in particular, for me, coming from up north, Hinerangi Puru? Hinerangi is the daughter of Dame Whina Cooper. Dame Whina Cooper, of course, led the famous land march here to Parliament, leaving her home in Pānguru, in the Far North and making the march all the way down here. The slogan and the kōrero that she gave everyone that marched with her was “Not one more acre.” Now, people think that’s just simply an acre of land. That’s a far too simplistic way to look at a very complex and intelligent woman. “Not one more acre” meant looking after the land too. It meant let’s care for our environment; let’s make sure that if we aren’t losing any more acreage, we leave it in a better state for our tamariki and our mokopuna. So I want to acknowledge Hinerangi Puru, who passed away, sadly, and will be on her marae this evening in Pānguru. That’s important, because I stand to oppose the Waste Minimisation (Waste Disposal Levy) Amendment Bill. Once upon a time, I was a civil defence Minister—

Hon Dr Megan Woods: That’s right—a very good one.

Hon PEENI HENARE: Thank you very much. I thoroughly enjoyed the role. Nobody enjoys being in places where emergencies and tragedies are happening, but it was a role that I relished and I enjoyed meeting amazing people who did amazing things. One of the fallouts, though, was that it wasn’t just the event itself.

Many of the people in this House will remember when the flood took place in the West Coast and an old landfill ended up washing into the river. Many people from the South Island know what needs to happen with a matter called “dross”: where it goes, what happens if it touches water, and how it impacts people. For those people in that township down in the South Island, poor waste management policies and poor waste management practices by corporate bodies in this country continue to affect our communities far and wide. So my point to this Minister for the Environment is: it’s no good just looking at the levy. Let’s have a good hard look at all the suites of policies and legislation that can allow communities to do the right things with their waste.

Of course, Mr Foster has said that he’s a little confused. All the parties on this side of the House have clearly said we’re happy for the levy to go up, but what we don’t want to see it do is be spread even more thin, right across the country. It’s got to be far more specific and far more deliberate, or what’s going to happen is we’re going to have more and more cases like dross in Mataura.

Hon Penny Simmonds: Removed years ago.

Hon PEENI HENARE: We’re going to have more and more riverbank washouts in the West Coast.

And Penny Simmonds might bark back from the other side of the House, but that Minister needs to know that very soon those things will come home to roost. Without good planning and without consultation with the public and the community, what’s going to happen is, through this bill, the pūtea, or the levy, will be spread even further and far afield. It’ll be a case of giving with one hand and punching you in the puku with the other. That’s what’s going to happen.

Sadly, what it also does is it blurs what’s good investment—it’s not deliberate enough. It says, “Oh, we’re going to invest in this because we think it’s good for the environment.” That’s not good enough. We need this to go towards more waste minimisation initiatives—ones that are already set up; ones that are working well in our community to further support the work that’s being done. My colleagues right across on this side of the House have given fantastic examples.

So my final words are: to the whānau out there who do this mahi, thank you. Don’t lose hope. We’re here for you. You might not have been able to find your voice on this particular bill, because it’s being rammed through unnecessarily, but here we are, standing up for you. I oppose this bill. I’m really saddened that the Minister had the opportunity to work constructively with this side of the House and failed to take it. It’s because of that, we’re going to go even harder into the evening. I do not commend this bill to the House.

STEVE ABEL (Green): Thank you, Madam Speaker.

Andy Foster: Here we go.

STEVE ABEL: Here we go—you are right about that. There is no away place, Andy Foster. There is no away place. Waste needs somewhere to go—waste needs somewhere to go—and if you don’t put it in the right place, it causes a legacy of toxic mess for generations to come. And right now, all across this country, the public is having to pay for cleaning up a bad history of waste management. There are dozens of sites across every district in this country—in fact, up to hundreds of sites—that need to be managed, and we are still creating the problem. We are still landfilling millions of tonnes of waste that should not be going to landfill. The reason that we, the Green Party, under Nándor Tánczos, put up the Waste Minimisation Act was to address that, and it was supported and taken on board by the Labour Party. And they will also at some point support our very wise proposition for increasing the actual volume of the levy, because we like to bring the Parliament with us on what needs to be done to address this very important issue of waste.

There is no away place, and when the levee breaks, we have no place to stay. What do I mean by that? I mean that the levy, as rightly articulated by my colleagues David Parker and Rachel Brooking, is a very important thing that we all agree on. We agree on the levy, and we agree it should be increased, but if you start frittering it away on the wrong things, you are squandering that vital—

DEPUTY SPEAKER: Please don’t use the word “you”. Thank you.

STEVE ABEL: Pardon me. Madam Speaker, I’m really sorry. I am genuinely trying to work on that thing.

DEPUTY SPEAKER: You are not alone, Mr Abel.

STEVE ABEL: I appreciate that it’s against the rules, and I apologise.

Hon Dr Duncan Webb: You’ll never walk alone!

STEVE ABEL: Thank you—over the hills and far away. If we waste the levy on things it is not designed for, we fail to actually mitigate the waste problem; we fail to actually accumulate the money that we need to build the infrastructure to actually deal with the waste problem. And that is a crime. That is a terrible thing to pass down to future generations.

What’s more, this amendment to the Act actually means that you can use this waste levy for cleaning up things that were produced by other industries, such as acid mine drainage from the coal industry, such as tailings failure. Tailings dams, if you don’t know about them, are a consequence of the mining industry. There’s a massive one outside Waihī full of cyanide. They commonly fail around the world, and they commonly kill people when they fail, and they cost a lot of money to clean up. Why is there not a levy on the mining industry to address the legacy of that industry’s cost? Why is the levy being put instead on municipal waste to cover the cost of the effects of contaminated sites from the mining industry?

That is an absolute failure, and this Government here, this “coal-ition” Government, want to do even more of that mining. They want to do even more of that mining and create even more of those acid mine drainage sites and those toxic tailings dam levees that in extreme weather events—which we’re seeing more and more of because of climate change, which is caused by coal burning, coincidentally, in case no one knew. Because climate change is going to cause more extreme weather events, it is in those circumstances of huge rainfall that you get more tailings dam failures. So we are facing that risk as a consequence of climate change. Why is there not a levy put on the oil, gas, and coal industry, the “drill, baby, drill” industry that this “coal-ition” Government want to have more of? Why is there not a levy put on them to clean up the mess that they are going to create?

That is where the levy for those toxic site contamination cleanups should be coming from, not from municipal waste, not from construction waste, not from the things that this waste levy was designed to do. That is why we will be voting against this bill—that is why we will be voting against this bill—and when the Government is ready to have a conversation about how we do a waste levy well, we’ll be there for it, Scott Simpson. We’ll be there for it.

Hon SCOTT SIMPSON (National—Coromandel): There’s something truly bizarre about a Green Party that is railing against a piece of practical, prudent environmental legislation that is designed to entirely fund exactly the sort of thing they’re complaining about, like the Fox River disaster that occurred in 2019. Now, I’m delighted, on behalf of this side of the House, to commend this bill to the House, because it represents everything that is good about a blue-green approach to environmental-practical approach.

GLEN BENNETT (Labour): I have moments, and I did last night, where I have a pregnant pause because sometimes I am flabbergasted. This is a debating chamber and we’re supposed to debate the elements of legislation that come through. And it’s hard to respond when there’s been little debate because there’s not much said from the Government side. But the previous speaker who just resumed his seat feels like this is good environmental practice and law.

But this legislation is actually around waste minimisation. That’s what was on the tin when it was created in 2008. That’s what it was there to do. And there’s a real challenge, as we look at this, because it’s doing things now that it wasn’t intended to do. Yeah, of course we agree we want to do everything we can to protect our environment, but then the challenge is that they take money from the Ministry for the Environment. They take money away from protecting nature. They take money away from climate change. So they’ve got to find it somewhere else, and so they extend this legislation. They make a huge chasm where they can dump all their rubbish and all their silly ideas into.

Now, this is a debating chamber and we need to be debating these issues. But, again, when it’s 30-second, 20-second calls, it’s hard to engage in a good debate. But, thankfully, this side of the House have been constructive and have brought good ideas and we look forward to implementing them in 2026.

The original Act, in 2008, was to promote and achieve waste minimisation—to promote and to achieve waste minimisation. That’s it—a levy. And, as the Hon David Parker mentioned in the committee stage, this isn’t about a levy; this is about a tax now, because suddenly it broadens everything out. And it’s not about waste minimisation; it is about finding dollars and cents to throw at the environment because they have purged and plundered. And, when he spoke about that—I didn’t get a chance in the committee stage to speak on the title, but I had thought about some ideas of what it could have been, what the title could have been on this bill. And one of them I had thought about was maybe it could have been the “Waste Minimisation (It Looks Like a Tax; It Sounds Like a Tax; It Smells Like a Tax; It Takes Like a Tax; Let’s Call it a Levy) Act”. But, obviously, I didn’t get that one through. I think it would have been good.

Why I bring that up is because officials have actually talked about this. Officials have, in one of the key documents, talked about the fact that in accordance with Treasury guidelines for setting changes in the public sector, in practice, fees and levies might not fit into discreet categories and could be considered as being on a spectrum. And it goes on to say that, in this way, a levy might be more akin to a tax. This is a tax. It smells like a tax. It takes like a tax. It is a tax, because, initially, of course, you would have your construction waste.

DEPUTY SPEAKER: No, not “you”.

GLEN BENNETT: Someone would have—well, I know where you live and I know that you’re into—

DEPUTY SPEAKER: I know where you live, too.

GLEN BENNETT: —home renovations, Madam Speaker.

DEPUTY SPEAKER: Just before anyone gets upset about that, we’re almost neighbours; so don’t worry about it.

GLEN BENNETT: Thank you. It does sound a bit weird; I apologise. DIY projects—so you want to do a renovation. Someone wants to do a renovation in their kitchen. Someone wants to, you know, develop the sleep-out. And, of course, they have bits of leftover timber, and, whether they’re treated or untreated, they take them to the dump. They pay a levy because that money from the levy then goes to support initiatives that reduce waste. So, now, when somebody—it wouldn’t be myself because I’m a horrific home improvement person; it would be someone like the Hon Duncan Webb, probably, would be renovating his ancient abode in Christchurch there. And he’ll take his waste to the dump and he will pay a fee. He will pay a tax because that money won’t go into waste minimisation; it could, but it might end up in environmental projects.

So, of course, we think that’s great, but it’s not what the bill was about when it was created more than 15 years ago. So we really want to address—well, I don’t want to offend elephants—the issues in the room today. And the reason we’re here in urgency, the reason we are sitting here discussing this, is because the Government cuts, cuts, cuts on all fronts when it comes to our environment, on all fronts when it comes to climate change. They took money out on 30 June. They took a lot of money out—millions and millions of dollars—and so they need to make up for it somewhere else. So “Oh, we’ve got this little wee bill over here that probably doesn’t need to go through urgency because it probably doesn’t meet the threshold, but, hey, we’ll just try it anyway.” And here we are without the ability for infrastructure companies, without the ability for construction companies, without the ability for green waste companies, without the ability for home DIYers to actually speak into this and talk about these levies, talk about these fees, talk about what they think this money should be used for.

The narrow criteria was meaningful. The narrow criteria had a purpose around waste minimisation. And so here we are—here we are. For most New Zealanders, it’s 1 June. It’s the first day of winter. But here we are on 30 May and it’s cold, and it’s cold and it’s depressing in here.

So, what was this for? So, hopefully, the Government MPs know what this was for. It was around things like curb-side collection. It was around things like the assets and infrastructure to ensure food and green waste, that we still want to do. It was about organic waste - processing facilities. It was around resourcing for the recovery for infrastructure, where they get rid of construction waste. It was around projects that must be directly diverted from landfills. And, now, some of that might happen, but not all the time. Some of it might happen but it’s going to be money’s going to be sprinkled over here; money’s going to be sprinkled over there; money’s going to be sprinkled, sprinkled everywhere. And it’s not good.

I also had done some thinking around the title, because, again, I’m just unsure because the word “levy” is triggering, and it is, I know, for all sides of the House. But I did have a look and have a think and I would have liked to have seen some ideas pass, but, unfortunately, it didn’t happen.

Another idea I had was the “Waste Minimisation Fiscal Savings for Budget 2024 Act”, but, you know, didn’t quite meet the threshold. Then there was the “Waste Minimisation that Occurs Through the Life of a Product Act”, which the Hon Penny Simmonds talked about. Then I talked about the “Waste Minimisation Finding Funds for Nature from this Act Because We Didn’t Use It in the Other Acts”, but that probably isn’t going to work either. Then there was the “Waste Minimisation Wasted, Wasted Acts”, but that just sounded a little bit dodgy and some people were really struggling with that.

But then I did have, and I think this is important—and I think this is a serious one. I think this actually could have been the bill. Because, as we know, and as one of my colleagues said earlier, the title is actually really important. When you go somewhere and you see a name on something, you know what you’re getting.

James Meager: Here comes the standing ovations.

GLEN BENNETT: Yeah, I’m happy for a standing ovation. I’d really appreciate that, because I think what we’re doing is pushing on something because nature is not standing and giving an ovation. Nature is not happy with what this Government is doing. And it was the “Waste Minimisation (Don’t You Know That It’s Toxic?) Act”. I don’t know. I was going to sing it, but I thought I better not because I might put the House into disrepute.

In closing, I think we really need to consider what has gone on in the last three days—what has gone on—whether it is our environment and ignoring it, whether it’s our climate and ignoring it, whatever it is. This Budget was terrible for the environment. It’s an outrage; it’s wrong. And you know what? When you look at 4,000 fauna and flora that only are found in this country, when you look at world regulations and world bodies mocking New Zealand for the way that we are treating our environment, I am offended, and it is wrong that we should allow cuts in some places and then sprinkles and nickels and dimes in others to feel like we’re appeasing our environment, to feel like we’re appeasing our climate. I think we need to totally scrap this and start again. I think we need to consider what we’re doing for the environment. I think we need to start again.

MIKE BUTTERICK (National—Wairarapa): Thank you, Madam Speaker. This bill is a good bill. It’s a win for in the environment. I commend it to the House.

DEPUTY SPEAKER: This is a split call.

LEMAUGA LYDIA SOSENE (Labour—Māngere): Madam Speaker, I rise to take a call—I did try to ask some questions in the committee stage, but I want to come back to this waste minimisation bill that is before us. Labour opposed this bill because we don’t see the value in diminishing the relationship in terms of broadening the criteria of the levy that we’ve all been talking about.

Many of my colleagues on this side of the House have traversed a number of reasons why the bill is not being supported on this side of the House, and one of the things that I wanted to raise was the fact that many communities throughout Aotearoa have heavy industry belts. What that means is industries that do quite a lot of damage to not just the air but also to the soil, and communities such as Māngere, such as a couple in South Auckland, are having to put up with industries who are contaminating the soils, who have industries such as recycling plants but are not taking care of things like scrap metal. And when you have a disaster in your local community that produces a fire because the current legislative requirements have not been met, Fire and Emergency have to tackle that—block the roads for two days; there’s a big fire and in that particular industry. So all the things that come out of an incident like that affect local communities.

One of the things that I wanted to raise that was in the analysis was the pace that this bill has been written at. The analysis and the modelling I would really question, because of the impacts on local communities and the limited assessment, particularly when you don’t have a select committee process, when you don’t have the voice of our community to raise issues right across the motu. And especially our rangatahi. In my local area, our rangatahi, our young people have been very, very active because this impacts on their future. So I want to raise on their behalf that part of the waste minimisation initiatives must include education—education of cause and effects. And my hope is that the Government needs to listen to the voices of their communities because we are here because of our communities. So when our communities don’t have a voice, we need to stand up as members and represent their voice.

Education is important because the waste minimisation speaks about that environmental harm, and in local communities, whether you’re from rural, whether you’re from an urban environment, many of our young people want to be involved in the good initiatives because they understand the environmental harm. And this bill doesn’t provide the context in which young people can get involved in actually pushing their views forward, because they’re really concerned about their environmental space, particularly in the urban areas. And when you come from backgrounds such as Māori  such as Pasifika, such as ethnic, then how do you input into laws of the land that you don’t even get a look in? When you don’t have stakeholder consultation, when you don’t—

DEPUTY SPEAKER: Can we just avoid the use of the word “you”.

LEMAUGA LYDIA SOSENE: Apologies, Madam Speaker. You’ve said that to nearly every person that stood up and I do apologise. It is really important that we receive stakeholder feedback in every process of the legislative chamber.

I wanted just to, quickly in my time that is left, reinforce as to why Labour is opposing this specific bill—because it just weakens, it doesn’t provide the opportunity for the public to raise specific issues around remediation of contaminated areas, around freshwater improvement, and specifically when you’ve got a large youth population and communities who don’t necessarily understand as to the environmental impacts. So this levy that is going to be collected doesn’t really benefit; it’s an indirect benefit for our local communities. And that’s why I want to stand up and advocate that as part of the suite of options, education around protecting our environment is very, very important. Thank you.

Dr HAMISH CAMPBELL (National—Ilam): This bill would make us better placed to deliver better environmental outcomes, so I commend this bill to the House.

REUBEN DAVIDSON (Labour—Christchurch East): Thank you, Madam Speaker, for this opportunity to speak once again—in such a short space of time—on this bill. I did, when I spoke earlier, reference the fact that this morning, when I was getting a coffee before coming into the House, someone asked me at the place where we get coffee whether we were getting tired. At the time I said, “No, we’re just getting started.” We’re just getting started.

Hon Member: You look tired.

REUBEN DAVIDSON: A member across the House just shouted that I look tired. Obviously, that member hasn’t looked at the policy they’re putting forward—that’s tired. But then, at lunch, the person at lunch said, “Now you must be getting tired.”, and I said, “No, we’re just getting going.”, because we are just getting going.

Now, I don’t want to waste any time, but I will make sure that I go slowly through this speech, because there are so many points that I need to cover off in this last opportunity, due to this rushed process. What I would say is that whilst this Government is wasting no time moving this bill through, they are trashing the process—trashing the process. There are several issues to cover in this call, and I’m going to struggle to fit it all in but I will do my best—I will do my best.

I want to talk about the impacts on community, and this will come up in a few parts of this speech because this process today has excluded community, and we know that this bill and its effects will really affect our communities. I’m going to revisit one of the things that I spoke about in my earlier speech. The Minister said that it didn’t really sit in the purview of this bill, but I think that it’s important that we revisit it, because it’s exactly what happens when communities are adversely affected by the impacts of waste facilities.

This is our beautiful estuary environment in Christchurch East, a stunning natural environment. It’s home to the river, the estuary, and the ocean. It has native flora and fauna. Native and exotic bird species nest there. It’s a beautiful, beautiful place. But it’s also home to an organics processing plant, and there’s been a long and ongoing issue with the smell that is generated by that organics processing plant. It’s a really, deeply offensive smell. It’s very hard to live with, and it has really affected local residents, many of whom can’t stay in their homes when that smell hits their houses at night. It’s affected schools, where kids can’t leave their classroom to eat their lunch, to play in their playground, or to ride their bike or their scooter home. It’s really affected communities.

Just to give a sense of how deep that effect is, I just wanted to read you the time line of the process that it took—

DEPUTY SPEAKER: Can I just ask the member—I understand the gravity of that situation, but I would like the link to come back to the waste minimisation bill.

REUBEN DAVIDSON: It definitely will—it definitely will. It ties directly into my first amendment. But thank you very much for reminding me of that, Madam Speaker. I think you will find it directly links to the amendment that I wasn’t able to speak to at that stage of the bill this morning.

On 20 January 2021, an abatement notice was issued to the organics processing plant requiring that there be no offensive and objectionable odour beyond the boundary after 31 January 2022; 1 February 2022, Environment Canterbury issues notice of non-compliance to the organics processing plant; 2 June 2022, Environment Canterbury issued notice of non-compliance to the organics processing plant; 4 June, another non-compliance notice; 31 August, a formal investigation into odours across eight dates; 19 December, another notice; 10 January, a non-compliance notice; 15 January; 19 January; 26 January—and on it goes.

Andy Foster: I raise a point of order, Madam Speaker. The last time we were on a third reading, we were instructed quite clearly by the Speaker to stick to the bill. He has gone a long, long way from the bill and hasn’t come anywhere near it for a very long time.

DEPUTY SPEAKER: Thank you for that point of order. I am listening for the connection.

Hon Dr Duncan Webb: Speaking to that point of order, Madam Speaker. If I may, this has cropped up before under urgency, particularly Budget urgency, where we haven’t had an opportunity to study this and prepare a great deal in advance. Speaker’s ruling 137/1 makes it quite clear that where a bill is passed through all stages under urgency, there’s a much wider approach than is normally the case, and that’s a ruling by Mr Mallard.

DEPUTY SPEAKER: I do understand that, Dr Webb. I would just like some linkage please. Thank you.

REUBEN DAVIDSON: Absolutely, Madam Speaker. Thank you, Madam Speaker. The good news is that I can now move on to how that sequence of dates and that community activity links into the point I was wanting to raise about the first amendment. That first amendment was a suggestion to change—or a request to change; an amendment to change—two words, and it’s because words really matter.

Now, if you want an example of how much words matter, here’s a really good example. “You will get X”—

DEPUTY SPEAKER: Not “you”.

REUBEN DAVIDSON: OK. Members—

DEPUTY SPEAKER: We’re really struggling today. Everyone’s getting tired.

REUBEN DAVIDSON: I was so sure I wasn’t going to say it—so sure I wasn’t going to say it. [Interruption]

DEPUTY SPEAKER: OK. Let’s give Mr Davidson a chance.

REUBEN DAVIDSON: Thank you, Madam Speaker. I’ll get back to my example of how much words matter.

Hon Member: Oh, must you?

REUBEN DAVIDSON: I must—I must. Here’s how words matter. “Members are entitled to X.”—members are entitled to X. Now, how different is it when you say, “Members are entitled to up to X.” It’s entirely different—entirely different. X becomes two different things when you add two words—“up to”—in front of it.

The two words I want to talk about in my suggested amendment was the difference between—and I’ve got them here because I think it’s really important that we focus on the detail of these. One of those words was “society”—society—and my amendment suggested changing it to “community”. Now, “society” can be defined as an organisation or club formed for a particular purpose or activity, and the definition of “community” is the conditions of sharing or having certain attitudes and interests in common. So words do matter because there’s quite a big difference between society and community.

The sequence of dates—and the point that I was making with that sequence of dates—that wasn’t a society; that was a community working together to challenge a council and to challenge a process that was taking place and was having a really detrimental effect on their community, not on their society. Hence my request in my amendment to change that word, because words do matter.

Now, the second amendment, which was to change the title to being the “Waste Minimisation (Last-track Levy) Amendment Bill”, was because it really is the mechanism of this bill now to be a very, very, very small safety net for some of the very, very, very big negative impacts that projects given permission by the fast-track bill will have on environments and on communities. So for those who don’t remember the reference at the time, I said, “What’s in the box should be what’s on the box”, but, in fact, what I should have said is, “What’s in the tin should be what’s on the tin”. So for anyone who got lost, “in the tin; on the tin” not “in the box; on the box”. So that was “what’s in the tin should be what’s on the tin”.

Hon Member: What about the bottle?

REUBEN DAVIDSON: A member did suggest talking about the bottle. I think it’s probably best that we don’t talk about the bottle.

What I did think would be important would be to talk about the reason that this bill has been pushed through in such haste, and we know that’s because the cuts that have been made in this Budget today, 30 May, are going to leave a really big shortfall in environmental spending. What’s required is that the small amounts of existing revenue are then funnelled into other activities—so taken away from where they’re currently hypothecated—and the scope of this bill is broadened out so they can be used in other places.

What we’re looking at here in this Budget is cuts to environment operating funding of close to $400 million. That’s $400 million. That’s a lot. It’s a sixth of what landlords—mega landlords—got in tax cuts in this Budget, but it’s a huge, huge and disgraceful amount of money to claw out of environmental spending, and I can’t imagine how anyone will sleep well tonight. I certainly hope they won’t before midnight. Thank you, Madam Speaker.

KATIE NIMON (National—Napier): I think it is about time we got this bill passed. So, with that, I commend this bill to the House.

A party vote was called for on the question, That the Waste Minimisation (Waste Disposal Levy) Amendment Bill be now read a third time.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

Bill read a third time.