Clark David: Taxation (Budget Measures) Bill — First Reading Second Reading In Committee 
Text is incorporated into the Bound Volume 
Clark David: Taxation (Budget Measures) Bill — First Reading Second Reading In Committee 
[Sitting date: 24 May 2012. Volume:680;Page:2436. Text is incorporated into the Bound Volume.] 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 This bill the Taxation (Budget Measures) Bill carries some real fish-hooks. It is a terrible shame and it is a waste of opportunity as this whole Budget that we have witnessed today also is. We are spending a couple of million dollars’ worth of parliamentary time tinkering—tinkering—and it is a shocking waste of taxpayers’ money when we are picking the pockets of paper boys and girls around the country because there are no other bright ideas it seems. This comes from a Government that has already delivered tax cuts 44 percent of the value of which went to the top 10 percent and just 2 percent of the value of which went to the bottom 20 percent. That was those 2010 tax cuts. The GST has been cutting in for those on low incomes as well and we know there are a lot of people around this country who are hurting right now. This Budget brings them no hope—no hope whatsoever. It is tinkering.  
We have in this bill the proposal to abolish three tax credits. It is a miserly proposal—a miserly proposal—picking the pockets of the paper boys and paper girls around the country. I too like the last speaker Mark Mitchell was a paper boy in my younger years. I got paid I think $2.86 or $3.16 for my deliveries of my first paper and that was on a contract. On my next delivery round I delivered the  
Auckland Star 
 and finally I was promoted to delivering the  
New Zealand Herald 
. Those little bits of money enabled me to appreciate the value of earning money and like many members of this House I have enjoyed many many jobs since. It also gave me pride in being able to earn that money. I know that National members do not think that is much and they do not care particularly for the little bits of money that those paper boys and paper girls earn around the country. But to take from them the money that they were getting in a tax credit that they looked forward to seems to be nothing but miserly. There is no other word for it.  
The next thing we see in this bill is the abolition of elections to leave a herd valuation scheme and that is a sensible move. It was proposed by the Labour Party and it is delightful to see that it has been taken up. But again that we need to go into urgency to achieve this change shows how limited the range of options for the Government is in terms of bills to debate.  
The final part of that bill deals with punishing students who have worked hard to pay off their loans. The rebate—the encouragement to pay off their loans more quickly—has been removed from these students. We know that lots of students are struggling. I see them in Dunedin all the time. Those students work hard. They study hard. They are eating noodles from bowls. They are making ends meet and they are doing their best. But this Government seems determined to make it harder for them and it seems determined to shut more and more students out of education. The Government has frozen the level of the incomes that the parent threshold relates to in order to make sure that fewer and fewer students will qualify for student allowances. Many of these students also go out to work to support themselves through their studies and they will have to work longer and harder under this Government and will have less time to work hard on their studies to ensure that they are good contributing taxpayers in the future. This Government seems to have no vision for educating its citizens for making sure they get the best skills for encouraging them to do that and for making sure they can make the most of their opportunities.  
We will hear more about the way in which the years of allowance have been taken from these students so they cannot get the longer degrees so they cannot add the value that they might add to this country. It is going to eliminate a group of students—those who are middle and low-income earners. It is not going to affect the really wealthy ones. It will affect only the low and middle-income earners. It is wasteful—it is wasteful of our talent. We have also seen that the real value of student support is going down. It has been going down. It has been trending down for a long time. The last thing we need is more punishment for students. But that is what we have got here in this bill—that is what we have got.  
If I can return to the matter of— 
Andrew Little 
: The kids. 
Dr DAVID CLARK 
: —the kids that is right—the paper boys and girls. What we find when we look at the regulatory impact statement is something quite astonishing. This attempt to broaden the tax base of New Zealand through pinching money from the kids not only perhaps is a little bit of a strange idea to members on this side of the House but also we can see that it is an inefficient idea. I read from the regulatory impact statement: “Generally speaking the proposed option should not impose any new compliance costs on business.” That is how these things regularly start. But wait. It says further: “However businesses that employ only school children on very low wages (below $2340 p.a.) may have to begin withholding PAYE from these employees from 1 April 2013.” This is increasing compliance so that we can take money from kids who earn under $3000 a year. That is outrageous. If this is the Government’s big idea it is embarrassing. This is a zero idea. Businesses employing schoolkids earning below $2340 per annum those very low wages may have to begin withholding pay as you earn. That means increased compliance.  
We can see that that is not going to be all. There will be other employers in the same situation. We will see it is not only schools that have to go through with this measure. We will find small delivery companies around the country with other low-paid workers that will have to ensure that those kids who are doing jobs for them go out there and pay as you earn and get robbed of their little tax credit.  
This is not base-broadening. This is certainly not visionary stuff. We have got an economy that is struggling. There is no doubt about that. We have been buying more than we sell for too long and this Government seems to have no plan to address it. It is very focused on Government debt. That is a problem that we agree is not too difficult to solve. Labour would have got there in the same time the National Government is planning to get there. But there are bigger issues. We have got this issue with buying more than we are selling. Our exporters need support. We need pro-growth tax policies not pinching money from paper boys and paper girls.  
We have had the idea of pinching money from the paper boys and the paper girls. We have got this tinkering. It resembles the wider Government tax programme which I am sure we will hear a little bit more of as the year goes through. It is very much in the same line. There is no attempt to wrestle with the bigger issues such as the capital gains tax that would push money towards the productive sector and the monetary policy that would support our export businesses. If we do not change anything in this area of taxation nothing will change. New Zealand will continue to limp along 50000 people a year will continue to leave for Australia 50000 more people a year will end up on the unemployment benefit and 50000 more people a year will end up out of work. This is not good enough; it is simply not good enough.  
In some of the publicity put out with these changes regarding the tax credits we see that the childcare and housekeeper tax credit is being removed also. The reason given is that it affects mainly high-decile people. That may be true and if the data presented in the publicity material which we have had a very short time to look over is correct then there may be some very good reason for amending that. But we also see that at least 20 percent—and by the look of it closer to 30 percent—of those families who receive this tax credit are actually from lower-income households. We are going to remove that tax credit from them because it is too hard to do anything different it seems. It is all about making sure that things are simple in one sense yet we are going to increase compliance on schoolkids in the other sense. It makes no sense.  
As I draw to a close I want to state again that if we do not change things greater than this in our tax system we will continue to see those same trends that we have seen up until now. We will continue to see our country borrowing. We will continue to see private debt growing. We will continue to see our citizens buying more than our exporters sell and we will continue to see exporters struggling in the face of unhelpful policies that the current Government is putting forward. Fifty thousand more people will end up going to Australia every year 50000 more people will end up unemployed and 50000 more people will end up on benefits. It is not good enough. We need bolder tax policy. This policy is not going to do it.