O'Connor Damien: State Sector Amendment Bill Public Finance Amendment Bill (No 2) Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill — Third ReadingText is incorporated into the Bound VolumeO'Connor Damien: State Sector Amendment Bill Public Finance Amendment Bill (No 2) Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill — Third Reading[Sitting date: 10 July 2013. Volume:692;Page:11958. Text is incorporated into the Bound Volume.]State Sector Amendment BillPublic Finance Amendment Bill (No 2)Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman):What a rubbish speech that was!Peseta Sam Lotu-Iiga: Oh!Hon DAMIEN O’CONNOR: Twiddling your thumbs while Rome burns. That member Peseta Sam Lotu-Iiga more than anyone else should know that what this Government has done around tax has been outrageous. I have to say I went to a breakfast yesterday morning put on by the voluntary sector. Professor Robert Wade—a Kiwi actually at the London School of Economics—was hosted by the Hon Jo Goodhew.I have never seen a Minister look so uncomfortable in my life. Here was a National Government Minister hosting a person who basically stood up and said that the taxation regime in this country is outrageous and that the changes this National Government has made—he did not refer directly to the Government he was far more polite than that; I am less polite—have created more inequality. He said the tax changes put in place by this Government—and the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill does no more than tinker—have driven greater inequality up and down this country.Professor Wade clearly laid out what that means for a society and it is pretty sad. We have as has been explained by previous speakers a number of technical issues around holiday homes boats and aircraft and other issues and some around the livestock taxation changes which bring a bit more balance and a bit more certainty.The bottom line is that when the National Government came into power it made two key changes to taxation and I do not see a reversal of those changes in this bill here. Firstly it lowered the tax for the most wealthy in this country and secondly it increased it for everyone else through GST. People have probably forgotten that GST was 12.5 percent in 2008 and the National Government has now got it at 15 percent. It is a regressive tax because those on low incomes spend all of their incomes surviving; those at the top end spend a small portion of their income the rest they can spend in ways that do not attract GST. So not only did we have lower taxes for people at the top; we had regressive taxation and GST increases at the bottom.This bill tinkers. The people at the top will have holiday homes and boats and aircraft and they have been able to get a bit of tax break on that. People will say that is outrageous and that the National Government is very good to be moving on this area. Well do not be sucked in. This is tinkering around the edges and I am sure many of the people at the top end—people who have an aircraft and get a tax break on it or have a holiday home and use it for something else—will find another way to get around it.But the core issues of taxation are around the increase in GST. And the other one that the Government slipped in at the start of this month was of course the increase in petrol tax—3c extra for every litre of petrol for every single Kiwi in this country. The people in the regions are outraged because they are paying basically for money to go to Auckland. Everyone who does not have access to public transport is having to pay a whole lot more. That is increasing taxation to people who cannot avoid it and decreasing taxation to those who can at the top end. That has been the consistent approach of the National Party in Government.Robert Wade embarrassed the Minister there yesterday—and she should have felt that way. He talked about a just society being one where distribution is done in the right way not redistribution. What we are effectively talking about here are changes in redistribution—tinkering at the edges but not going to the core of the taxation system in this country. My colleagues have pointed out a number of other flaws. On balance we will support the bill. It makes as I said slight progress in areas tidying up a bit here and a bit there but it does not do anything to change the underlying unfairness of taxation in this country.I raise another point that a colleague brought up yesterday and that is in regard to the Inland Revenue Department and its whole running of the taxation system. Its ability to actually implement all these changes has come under serious question and of course its use of consultants is now being exposed. The Government in slashing and undermining Public Service capability is increasingly bringing consultants into the taxation system and every other area of Government responsibility at a far greater cost but they are on a different appropriation line. Sometimes it is hard to track down unless we ask the right questions.The point is that if the Inland Revenue Department is going to give effect to the changes here it has to have the capability and bringing in consultants to help it tidy up mistakes of the past or to deal with a lack of capability is not the best way forward. If the Inland Revenue Department does not get on and improve the system and if the Government does not fund it properly then not only will the computer system fall over but so too will the basis of taxation in this country. So I hope that the Government gets on and deals with it.I will just finish on an issue around livestock valuation and I would like to reinforce a point I made earlier in the debate a couple of weeks ago. The Government seems to be and claims to be very good at livestock taxation. It is the issue of deadstock taxation that I want to refer to. The Government’s management of the trade of meat has not been good. Once again it has squeezed a Government department and it has no ability now to manage exports from this country into what are complex markets like China.I fear that the ongoing determination by this Government to drive down Government capability is going to lead to some major problems and none more so than in the area of biosecurity once again. If biosecurity is breached—and this may be a corny connection but it is none the less an important one—and we end up with foot-and-mouth disease the result will be that although the Government has sorted out livestock taxation we will have a hell of a lot of deadstock taxation and a major blow to our economy.So in endorsing and supporting the bill I just want to remind the House that the Government record in the area of taxation is outrageous. It has made changes to give greater benefit to those at the top and imposed a greater burden on those at the bottom. That creates an unfair society and it is one that we do not support in any way at all.