Collins JudithHon JUDITH COLLINS (Minister of Revenue): Mr Chair thanks for the opportunity. I must say I did enjoy the contribution from the Hon Ruth Dyson. She has an excellent sense of humour; you have just got to know where to find it. It is in there somewhere.But I think I have to address a couple of the issues raised by Mr Tabuteau. First off let us have a look at revenue. Revenue is I think one of the most important of all portfolios. As members will know I think all of my portfolios are the most important portfolios and that is because they should all be treated extremely seriously and have a huge effort put in. But actually the appropriations sought by Vote Revenue for this financial year total $6728 million dollars—that is an increase of 11 percent on last year. That is primarily around the Business Transformation programme which is essentially a $1.9 billion programme over several years that is modernising the inland revenue system—the tax system—in the way it interacts with New Zealand taxpayers and also those who are receiving social benefits such as child support and things like student loans. It is an extremely important part of Government because without revenue functioning well then actually nobody has got any money to spend on anything. So it is very important.At the same time I will just address the issue that Mr Tabuteau mentioned. He said something about 1500 people being sacked and whatever from the Inland Revenue Department. What is actually happening with Inland Revenue is because it is moving into the world of online everything—and digital and real-time payment and calculation of tax—it is having to retrain so many of its staff. So it is looking to take its 6000-odd staff and take 4200 of them and actually help to upskill and retrain them in areas where they can be of best value to not only Inland Revenue but also to the people of New Zealand and they can have skills that otherwise they would not have. In addition to that Inland Revenue is increasing the number of tax specialists it has which I think is an excellent idea and it should do that.Ultimately over the next 5 or 6 years it is going to have with attrition a reduction in numbers because of the fact that actually the systems are becoming so much more real-time so much more friendly to taxpayers that there will not be quite the same sort of pen and paper work that has had to be done in the past. There is no decrease in the number of people who are available to talk to taxpayers; in fact quite the opposite.I am very much aware of this as an issue and I think most people would be—that we need to modernise that we need to do all these sorts of things we are doing around GST. But actually you cannot do what we are doing in the modernisation area without the computer grunt and the huge back-end work that has to happen and that is what is happening now.Coming forward into this year on 1 April next year we will have the AIM system in place. I am just going to explain that for members because I think it is one of the best things that Inland Revenue can do for any small business. Essentially we all know about PAYE. As salary and wage earners our tax is taken from us as PAYE every fortnight when we are paid—we all understand that. That actually means that sometimes we are going to end up with having some tax that is owed to us at the end of the year and occasionally there is some that we owe.For small businesses and businesses generally there is another thing called provisional terminal tax. That is the bane of every business owner's life particularly in small business where there is often not the capital and often not the resources to actually suddenly pull in large amounts of money that you need to pay to IRD. It also requires that you be able to guess ahead for what you are going to be earning in a year and actually that is pretty impossible for most people to do. They either over-guess or they under-guess; whatever way it is not good.AIM is best described as being PAYE for small business. I know that is how it is best described because that is what I decided to call it—PAYE for small business"—and that is because that is exactly how it is going to work. It is an excellent idea. What it will basically mean is that as the businesses pay their own PAYE for their staff and everything else and they do their books every month if they have approved accounting systems—which more and more businesses are moving on to or have moved on to—they will be able to actually pay their tax off the profit for that month. That means that some months they will have more tax to pay; some months they will have less tax to pay; some months they will have tax credits. There is liable to be a little bit of a washup at the end of the year but it will not be the sort of terrible trouble that people get into with provisional and terminal tax now so I think this is one of the best things we could do.We cannot do this without the Business Transformation project and I just think it is something that we need to take a really great amount of pride in. Once this gets going and it is going well it will be great for New Zealanders."