Nash Stuart: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — First Reading 
Nash Stuart: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — First Reading 
[Volume:676;Page:21436] 
STUART NASH (Labour) 
: 
 As my colleague the Hon David Cunliffe mentioned Labour will be supporting the referral of the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill to a select committee. We think this bill has some very good aspects and we look forward to further discussions with officials and with submitters and around the table. 
One of the reasons for this bill and one of its big parts is to make tax easier. This is a plan by the Inland Revenue Department to make tax easier. It sounds like a good idea and Labour is supportive and always has been supportive of any legislation that makes it easier to pay one’s tax or makes it easier for taxpayers to comply. It was a good paper and I think the Inland Revenue Department is making some great progress in this area. As mentioned I look forward to dialogue with the Inland Revenue Department with submitters and with the rest of my colleagues when the bill comes to the select committee. 
There are some points that I would like to make very briefly. Again as my colleague mentioned one of the things the bill does is set the tax rate for the next tax year. We are one of the very few countries in the OECD that has cut tax rates for the very wealthy. If I may I will give an example. With National’s tax cuts we saw those who had a declared income of over a million dollars receiving about $1000 a week extra in the hand. The Inland Revenue Department has told me that there are about 700 New Zealanders who have a declarable income of over a million dollars. If they earn a million dollars they received about a $1000 a week extra. Someone on the median wage in Napier received about $11 a week extra. The question I ask and the question people ask me is whether that is fair. Quite simply it is not fair. 
One of the reasons it is not fair apart from the obvious is that these tax cuts were paid for by an increase in GST. This bill deals with GST matters and again we are all for anything that makes the system or improves the integrity of the system. But the thing that I have a slight problem with is the fact that Mr John Key when he was the Leader of the Opposition stood in front of New Zealanders looked into the camera and said: “National will not increase GST.” Yet one of the first things Mr Key did was to increase GST from 12.5 percent to 15 percent. The money that the Government collected from that increase in GST funded the tax cuts of $1000 a week for those men and women earning over a million dollars a year. Paul Reynolds who is one of the highest-paid gentlemen in this country received $4500 a week extra in the hand from the tax cuts. We have to ask whether that is fair and we do not think it is fair at all. 
The other things the bill deals with are Working for Families and KiwiSaver. National went into the 2008 election telling New Zealanders that a National Government would not cut KiwiSaver. Yet in the last Budget KiwiSaver was cut. Many people around the country said that they had a contract with the Government in the form of KiwiSaver and the Government reneged when it made cuts to every person’s KiwiSaver account. 
Another aspect of this bill is Working for Families. Let me give one example. I come from Hawke’s Bay and Working for Families contributes about $120 million into the Hawke’s Bay economy. At the moment in the provinces things are a little bit tough. People are working very hard but things are tough. The cost of living is going through the roof and the $11 a week that someone on the median wage received in tax cuts is simply not covering it. So when the Government makes cuts to Working for Families it affects the whole regional economy. 
The people who are receiving Working for Families are receiving it because they need the money to raise a family. They spend the money in the local economy and it creates jobs and creates demand and it helps those workers who are working in the Hawke’s Bay area. Making cuts to that scheme was detrimental to the whole Hawke’s Bay region and in fact to the whole New Zealand economy. 
Someone asked me: “Why does Mr Key hate New Zealanders who are struggling hard to get ahead?”. I am seeing a number of people coming into my office which is based in Napier who are working very hard. These are full-time workers but they are having to make a choice—whether they pay the rent or the mortgage whether they pay for food whether they put petrol in the car whether they pay for electricity or whether they put clothes on their kids’ backs. They are having to make that choice. I wonder whether this is the sort of country that New Zealanders believe New Zealand should be. People who work very hard are still struggling to make ends meet. That is all I will say on that issue. 
But there is one other thing I will bring up and this is one issue that we will tease out in the select committee. It is something that Mr Cunliffe mentioned. It is the tax treatment of unsuccessful software development. I wonder whether this is a little bit self-serving. The key feature here is that the amendment allows a deduction when a person or a company I assume incurs expenditure on developing software for use in their business and the development of this software is abandoned. 
Earlier this year the Inland Revenue Department abandoned a software project in respect of its student loan scheme. The cost of that to the Inland Revenue Department and the taxpayer was about $20 million. That was $20 million of taxpayers’ money that went into a scheme that had the plug pulled out from it. I wonder whether this amendment is slightly self-serving. We are all for economic development and we are all for businesses getting ahead. There is no doubt that increasing productivity is the only way forward for this country and software systems help that. But when everyone knows that the Inland Revenue Department wrote off $20 million I wonder whether this is slightly self-serving. 
On that note as mentioned Labour will be supporting this bill’s referral to the select committee but there are many conversations that have to be had before we will support it all the way through. Thank you very much.