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Radhakrishnan Priyanca; Upston LouiseHon PRIYANCA RADHAKRISHNAN (Labour): Thank you Mr Chair. Unsurprisingly I've got a few questions for the Minister for Disability Issues around specific changes to disability support funding that were announced and implemented with immediate effect on 18 March which removed flexibility from that funding to the point that many within disability communities have described that as devastating and the fact that they were blindsided by those changes. Now the flexibility for that funding was introduced a couple of years back and it was done so because of the diversity of the disability community and of disabled people themselves and therefore their needs. This was I understand a funding pool that was under-utilised because while the needs existed back then they just weren't able to access the funding to meet those needs. Now as we all know and we've determined in the House over the past month and a half or so the former Minister knew about the funding shortfall within Whaikaha back in December last year and did nothing to address that. That then led to the changes that were announced on 18 March.I have some questions that have been raised by a number of people—disabled people carers and the wider disability support communities—about this. I'd really like to know what the Minister can tell us in terms of the total number of people who have been impacted by the changes that were announced and implemented on 18 March and that would be everyone who was accessing the different funding support pools that were impacted. I would also like to know from the Minister: what were the total savings that were made as a result of those 18 March changes?Hon LOUISE UPSTON (Minister for Disability Issues): I have a note in front of me from the whips that says I must keep my answers short so I'm not going to cover things that I've already covered and nor will I cover things that I contained in the review.
Trask Laura; Upston LouiseLAURA TRASK (ACT): Thank you Mr Chair. My question is to the Minister and I appreciate that this is a debate on the annual reviews but it's a bit of a forward-looking question and I know we have some scope for that so I hope you accept it. I'm wondering what the Minister's plan will be going forward in regards to the Accessibility for New Zealanders Bill given that members of the disability community felt the proposed bill by the previous Government was a slap in the face and the community felt the cries for change weren't being heard?The bill proposed by the previous Government was tokenistic and does not go far enough to address the very real issues that those living with disabilities face. Access to buildings transport education digital information recreation and employment have a profound effect on a person's quality of life and we here at ACT believe we can do better and we must restore the trust from the disability community in the Government.Some comments from the community: Blind Low Vision NZ state It doesn't have credibility with the community it purports to advance because it ignores the discrimination that people who are blind deafblind or have low vision experience on a daily basis." A submitter to the Social Services and Community Committee on this the previous Government's bill said "This is systematically ableist to its core and would probably do more harm than good. This bill is a token. The Labour Government chose to take a longstanding ask of disability advocates in our lives to take its language pretend they were listening and twist it until it was unrecognisable and meaningless."So to the Minister what is her plan for the Accessibility for New Zealanders Bill and how are you going to address this going forward?Hon LOUISE UPSTON (Minister for Disability Issues): Thank you Mr Chair and I thank that member for her comments about the accessibility bill and I unfortunately have to agree. This was another example like the creation of the Ministry for Disabled People where expectations were enormous and then what was delivered has been a massive disappointment. And the accessibility bill was exactly one of those cases. The challenge we have now is that the bill is so fundamentally flawed and I don't recall actually many if any submitters that were in favour of the bill when it was before the select committee. So the question that I have to consider is whether there is anything redeeming in the bill or whether we go back to the drawing board. As I said my focus at this time is to ensure that the review into the disability support services is undertaken robustly. And I know having heard from many disabled people they want this sorted. They want certainty and consistency of service. So that is my number one priority. But I will come back and address the issue of the accessibility bill because the underlying problems of access that you spoke about in your contribution still exist and they create real challenges for the quality of disabled people's lives."
Radhakrishnan Priyanca; Upston LouiseHon PRIYANCA RADHAKRISHNAN (Labour): Thank you. Thank you Mr Chair. I will repeat the questions—CHAIRPERSON (Teanau Tuiono): And noting there's a very short time frame so you want to be—Hon PRIYANCA RADHAKRISHNAN: Yes. How many people in total were impacted by the changes that were announced and implemented with immediate effect on 18 March what total savings have been made or will be made as a result of those changes and what other options were considered other than removing flexibility?Hon LOUISE UPSTON (Minister for Disability Issues): There was an increase in flexibility that was created because of COVID that was never adjusted—in all fairness should have been—and the number is 34000.
Kemp Takutai TarshTAKUTAI TARSH KEMP (Te Pāti Māori—Tāmaki Makaurau): Tēnā koe. Tēnā tātou. A few questions for the Minister. Māori experience disability at a higher rate than any other population group in Aotearoa. One in three Māori have some form of disability yet we have the least access to support in health and disability services. The pandemic as well as Cyclone Gabrielle highlighted these massive inequalities for our people. This is also backed up by statistics.Our tāngata hauā community feel they are being systematically targeted by Government organisations and Crown agencies and treated as economic burdens. The evidence for this is in access to employment education housing cultural access transport healthcare Government funding and whānau relationships plus the inaccessible attitudes within Government organisation structures. So the question is what is the Minister's strategy to address inequalities across all sectors for Māori with disabilities?It has been shown that as the wellbeing of indigenous and disabled whānau is improved so are the outcomes for everyone. Despite this Māori have no official presence at the Disabled People's Organisations Coalition table. Te Ao Mārama Aotearoa is the only pan-tribal and pan - disability rōpū in the country but they are denied a voice at the table. This is a breach of the United Nations' Convention on the Rights of Persons with Disabilities and Tiriti rights. Can the Minister ensure that Māori disability organisations are formally included in the decision making at this tēpu?Another question is also that we want to know if the Government is considering a strategy to support cultural access for Māori with disabilities. For example there are only 12 qualified sign language interpreters who can translate into and from te reo Māori. Would the Minister consider te reo rotarota Māori sign language an official language to support our deaf community in accessing their culture?Disabled beneficiaries: there are over 80000 people on the benefit for health-related reasons. The Government has committed to cutting benefit numbers by 50000. This reduction won't just apply to those work-ready; the Government will also be targeting people who are on disability related benefits. How will the Minister ensure that this will not lead to further systematic discrimination of our disabled community so that they are able to live with dignity without needing to repeatedly prove their disability to Government to keep their benefit? What analysis has been done on the disproportional impact that indexing benefit increases to inflation will leave on people with disabilities as current modelling suggests that a disabled couple would be $9 a week worse off in the first year and $33 a week worse off by 2026 because of this change? That doesn't take into consideration the cost of living increases that will occur. Kia ora.
Sepuloni CarmelHon CARMEL SEPULONI (Labour—Kelston): I would like to know what exactly was in the annual review or came out of the annual review that led the Minister to prioritise a review of the name of the ministry and what came up in the past year through that annual review that caused that to be something of urgency and for the Minister to think moving away from Whaikaha—Ministry of Disabled People should be what she's focused on?
Kuriger BarbaraDisability IssuesCHAIRPERSON (Barbara Kuriger): Members our time for social development and employment has ended. We will move to disability issues for 30 minutes for the Minister now to respond to members' questions on disability.
12. Question No. 12—HealthRACHEL BOYACK (Labour—Nelson) to the Minister of HealthQuestion No. 12—Health12. RACHEL BOYACK (Labour—Nelson) to the Minister of Health: Why has Te Whatu Ora signalled a scaled-back project for the Nelson Hospital rebuild? Hon Dr SHANE RETI (Minister of Health): I reject the characterisation in the question. This Government is absolutely committed to the people of Nelson and to delivering a hospital that will meet their needs. That is why Health New Zealand has learnt from other large-scale infrastructure projects and are now looking to phase this build. This potentially allows for buildings to be commissioned earlier and patients to be seen sooner all whilst work on the remainder of the site continues. This Government is committed to delivering better public services and that means getting smarter on how we deliver key infrastructure projects. Rachel Boyack: Why is he signalling a preference for small separate buildings when advice provided last year was that a full rebuild was the clinically preferred option? Hon Dr SHANE RETI: Health New Zealand has learnt from other large infrastructure projects and we are now of a view that looking to phase these projects will reduce risk and potentially—as I mentioned in my reply to the primary—allow earlier commissioning of sites. Rachel Boyack: Can he guarantee that all beds and critical services like laboratory services will be housed within an IL4 grade building that can continue to support clinical patient needs when the Alpine Fault ruptures? Hon Dr SHANE RETI: This project is still in design phase towards a business case but we will deliver a facility that is fit for purpose and serves the needs of the people of Nelson. Rachel Boyack: Why does demand modelling need to be redone when it was only completed in 2023 and Nelson's population isn't getting any younger or smaller? Hon Dr SHANE RETI: I have seen data points for bed modelling from 2018 and we want to deliver a facility that is fit for purpose. Hon Nicola Willis: Can the Minister confirm whether Health New Zealand has taken lessons about what went so terribly wrong that led a hospital that was announced in Dunedin in 2017 to still not be delivered? Hon Dr SHANE RETI: I can confirm that the lessons learnt from that project will be applicable to other builds such as the build in Nelson that the member is asking about. Rachel Boyack: Will he commit to completing the new hospital by 2031 on budget and with at least 255 beds? Hon Dr SHANE RETI: I can confirm that the current project is on track including the enabling works which as I understand it involve movement of the power generation from one side of the road to the other—surely a good signal that we will build this facility and have it fit for purpose.
9. Question No. 9—Tertiary Education and SkillsHon Dr DEBORAH RUSSELL (Labour) to the Minister for Tertiary Education and SkillsQuestion No. 9—Tertiary Education and Skills9. Hon Dr DEBORAH RUSSELL (Labour) to the Minister for Tertiary Education and Skills: Does she stand by all of her answers to oral question No. 5 on Wednesday 8 May; if so why?Hon PENNY SIMMONDS (Minister for Tertiary Education and Skills): Yes. [Interruption]Hon Dr Deborah Russell: Oh yes there's a second one. Point of order.SPEAKER: I'll tell you what—what about you just give me a moment to do those things rather than chipping from the sideline. There are two legs to that question. The Minister should attempt both those legs.Hon PENNY SIMMONDS: Thank you Mr Speaker. Yes I made my expectations clear that Te Pūkenga should work to implement Government policy.Hon Dr Deborah Russell: When she made her expectations clear in the meeting with the chair and CEO of Te Pūkenga on 30 November 2023 had Cabinet taken a formal decision to disestablish Te Pūkenga; if not what decision with regard to Te Pūkenga had Cabinet taken at that stage?Hon PENNY SIMMONDS: Yes Cabinet had made a decision.Hon Dr Deborah Russell: Did she indicate to the chair and the chief executive of Te Pūkenga at her meeting with them on 30 November 2023 that she had expected they would have already presented her with a detailed plan for Te Pūkenga's disestablishment?Hon PENNY SIMMONDS: No.Hon Dr Deborah Russell: Did she receive advice from Te Pūkenga or any other officials that her expectation could give rise to personal grievance claims on the part of affected current former or potential employees?Hon PENNY SIMMONDS: No.Hon Dr Deborah Russell: Why can't she explicitly rule out in this House that she directed the chair and the CEO to begin disestablishing Te Pūkenga?SPEAKER: That's in the nature of a yes or no answer that's being required. Can you just think about how that's asked? The Minister should consider that when answering the question.Hon PENNY SIMMONDS: I made my expectations clear that Te Pūkenga should cover the disestablishment of Te Pūkenga as was the Government policy. I made my expectations clear that Government would begin disestablishing Te Pūkenga within the first 100 days that Te Pūkenga should operate in a manner that was consistent with Government plans and that Te Pūkenga should support as much regional decision-making as possible. I also made my expectation clear that Te Pūkenga should ensure vocational education and training continues and staff and students were supported.
10. Question No. 10—Local GovernmentSAM UFFINDELL (National—Tauranga) to the Minister of Local GovernmentQuestion No. 10—Local Government10. SAM UFFINDELL (National—Tauranga) to the Minister of Local Government: What announcements has he made on restoring democracy in Tauranga?Hon SIMEON BROWN (Minister of Local Government): Great news for the people of Tauranga: the coalition Government is committed to democracy and that's why we've announced that—no ifs no buts—democracy is being restored to Tauranga this year with election day taking place on 20 July. I want to encourage the people of Tauranga to vote in their upcoming council elections or even stand to be elected as democracy is restored and Tauranga moves forward.Tom Rutherford: What does this mean for the people of Tauranga?Hon SIMEON BROWN: Well it has been 3½ years since democracy was stripped away from the people of Tauranga but now they will finally have a say over how their city is governed. That is good news for the hard-working ratepayers of Tauranga who deserve to have a seat at the table on the decisions affecting their city.Tom Rutherford: When do nominations open?Hon SIMEON BROWN: Well nominations for the mayoralty and councillors have already opened and I encourage those in Tauranga who wish to represent their community and stand in the upcoming election to nominate themselves now. Nominations close on 24 May before the all-important election day in Tauranga on 20 July.SPEAKER: It's a very good advertorial but I would suggest the Minister's staff advise him about his responsibilities. They are not the Electoral Commission.Cameron Luxton: Thank you Mr Speaker. How will the people of Tauranga be impacted by his announcement to restore citizens initiated referenda on Māori wards?Hon SIMEON BROWN: The coalition Government is restoring the rights of communities to determine whether to introduce Māori wards as part of the coalition agreements. We will be reversing the previous Government's changes that denied local communities the ability to determine whether to establish Māori wards. Local community members deserve to have a say in their governance arrangements and in Tauranga they will be required to have a referendum between now and the 2028 local body elections.
8. Question No. 8—TradeDANA KIRKPATRICK (National—East Coast) to the Minister for TradeQuestion No. 8—Trade8. DANA KIRKPATRICK (National—East Coast) to the Minister for Trade: What actions has the Government taken to support New Zealand trade?Hon TODD McCLAY (Minister for Trade): It's been an important month for New Zealand exporters. Not only did the EU-NZ free-trade agreement officially enter into force last week many months sooner than expected but on Tuesday I announced on behalf of the Government the launch of negotiations for a comprehensive economic partnership agreement (CEPA) between New Zealand and the United Arab Emirates (UAE). The UAE is an important bilateral partner for New Zealand and this launch of formal negotiations is an exciting step towards growing our trade and economic relationship.Dana Kirkpatrick: What opportunities would this trade agreement with the UAE create?Hon TODD McCLAY: The UAE is a key export destination and a hub in the Gulf region. Currently we export around $1 billion worth of goods and services to the UAE an increase of 17 percent over the last year. By investing in this relationship we'll open up further opportunities for New Zealand businesses and enhance cooperation across a range of fields including agriculture food production and sustainable energy. This will help grow the economy and create higher-paying jobs for New Zealanders.Dana Kirkpatrick: How would an agreement with the UAE benefit New Zealand?Hon TODD McCLAY: A CEPA with the UAE will contribute towards the Government's vision of becoming an export powerhouse for New Zealand to our target of doubling exports by value over 10 years and help rebuild our economy. By strengthening our trade relationship with the UAE we can bring increased returns for New Zealand businesses support job creation reduce the cost of living diversify the economy and put more money in the pockets of everyday consumers in New Zealand.Dana Kirkpatrick: What else has the Government done to support New Zealand trade with the Middle East?Hon TODD McCLAY: Not only would this CEPA strengthen economic ties between New Zealand and the UAE but it will also complement our ongoing negotiations towards a free-trade agreement with the Gulf Cooperation Council (GCC). I was pleased to advance these discussions during my recent visit to Saudi Arabia last week and my discussions with the Saudi and GCC counterparts. Trade agreements are an important tool in this Government's plan to rebuild our economy and a strong economy means we can provide the quality public services that New Zealanders expect.
3. Question No. 3—Social Development and EmploymentDr CARLOS CHEUNG (National—Mt Roskill) to the Minister for Social Development and EmploymentQuestion No. 3—Social Development and Employment3. Dr CARLOS CHEUNG (National—Mt Roskill) to the Minister for Social Development and Employment: What recent announcements if any has the Minister made about earlier interventions for those on the jobseeker support benefit?Hon LOUISE UPSTON (Minister for Social Development and Employment): This morning I announced a new initiative called Kōrero Mahi – Let's Talk Work which will help people who come on to the jobseeker benefit get back on their feet quickly. All new jobseeker beneficiaries who have work obligations must now meet with the Ministry of Social Development (MSD) within two weeks of starting their benefit to determine their next steps towards finding work. This initiative is part of the Government's plan to make the welfare system more proactive and to check on job seekers to make sure they're getting the right support and they're on the right path.Dr Carlos Cheung: What will happen when a job seeker attends a Kōrero Mahi work seminar?Hon LOUISE UPSTON: They will attend a group seminar with MSD and figure out the best way forward and the steps that they need to take. If they are work-ready they could be connected with job vacancies straight away. If they need retraining or upskilling they could be referred to a programme that can help them. The important thing is they are taking the steps they need to to return to the workforce as quickly as possible to avoid getting trapped on welfare.Dr Carlos Cheung: Why is the Minister introducing this early intervention for people on jobseeker benefits?Hon LOUISE UPSTON: Because before now some people on jobseeker benefits could go many months without interacting with MSD because the requirement to do so didn't exist. Of about 188000 people who are currently receiving the jobseeker support benefit only 53 of them have employment case managers at any given time so this early intervention is crucial for making sure that all job seekers are taking the steps they need to find work.Dr Carlos Cheung: Will sanctions apply to those who are uncompliant?Hon LOUISE UPSTON: Kōrero Mahi will be considered a work obligation for those on the jobseeker support and failure to attend without a good and sufficient reason could result in a sanction being applied. But I want to be clear. I want to be clear: no one is sanctioned if they can't find a job. If the work isn't there their benefit will remain. The welfare system under this Government will support those in need but there are rights and responsibilities that come along with being a New Zealander receiving benefits and there will be consequences for those who don't play their part.
VoteCHAIRPERSON (Maureen Pugh): Chlöe Swarbrick's amendment to insert new clauses 4AA and 4AB set out on Amendment Paper 22 is ruled out of order as being outside the scope of the bill.The question is that Dr Ayesha Verrall's amendment to Part 2 set out on Amendment Paper 27 be agreed to.A party vote was called for on the question That the amendment be agreed to.Ayes 34New Zealand Labour 34.Noes 83New Zealand National 49; Green Party of Aotearoa New Zealand 15; ACT New Zealand 11; New Zealand First 8.Amendment not agreed to.Parts 1 and 2 and clauses 1 to 3 agreed to.Bill to be reported without amendment.
Misuse of Drugs (Pseudoephedrine) Amendment Bill — In Committee
Pugh MaureenREPORT OF THE COMMITTEE OF THE WHOLE HOUSECHAIRPERSON (Maureen Pugh): Madam Speaker the committee has considered the Misuse of Drugs (Pseudoephedrine) Amendment Bill and reports it without amendment. The committee has also considered the Road User Charges (Light Electric RUC Vehicles) Amendment Bill and reports it without amendment. I move That the report be adopted.Motion agreed to.Report adopted.
Bidois DanDAN BIDOIS (National—Northcote): I move That debate on this question now close.Motion agreed to.
Taxation (Annual Rates 2023-24 Multinational Tax and Remedial Matters) Bill — In Committee—Part 3
VoteA party vote was called for on the question That debate on this question now close.Ayes 68New Zealand National 49; ACT New Zealand 11; New Zealand First 8.Noes 55New Zealand Labour 34; Green Party of Aotearoa New Zealand 15; Te Pāti Māori 6.Motion agreed to.CHAIRPERSON (Greg O'Connor): The question is that the Minister's amendments to Part 3 set out on Amendment Paper 20 be agreed to.A party vote was called for on the question That the amendments be agreed to.Ayes 68New Zealand National 49; ACT New Zealand 11; New Zealand First 8.Noes 55New Zealand Labour 34; Green Party of Aotearoa New Zealand 15; Te Pāti Māori 6.Amendments agreed to.A party vote was called for on the question That Part 3 as amended be agreed to.Ayes 68New Zealand National 49; ACT New Zealand 11; New Zealand First 8.Noes 55New Zealand Labour 34; Green Party of Aotearoa New Zealand 15; Te Pāti Māori 6.Part 3 as amended agreed to.
Leary Ingrid; Watts SimonINGRID LEARY (Labour—Taieri): Mr Chair please bear with me because I wasn't on the Finance and Expenditure Committee but I did indicate last night that I was going to be asking a question about gift-exempt bodies which is clause 66(4). And the proposed amendment would extend the definition of a gift-exempt body to include all charities registered under the Charities Act.When I look at the bill it looks like there has been a whole subsection in section 3 of the Tax Administration Act that has been thrown out and that was based on the fact that there were submissions made in the select committee about gift exemptions and saying that monitoring and compliance of the regime was problematic and unfair. And I'm interested to know why—it feels like perhaps the baby has been thrown out with the bath water—the Minister of Revenue and the select committee would throw the whole part out and say that in the meantime they're going to take advice: Let's just get rid of that whole subsection." What do charities do in the meantime? Charities that have relied on that gift-exemption clause in 66 what are they going to do? What are the time frames involved for this to be relooked at? And is the Minister going to follow the recommendations from some of the submitters that has basically led to this being kind of put on an indefinite pause?I would have thought that a better way of making law would be to perhaps have held this over to keep the section as it is to take some further advice to have a look at the submissions in the select committee and then to delete out that section rather than just kind of having this legal gap where those who are influenced by that subsection who've relied on it previously can no longer do so. So I'm very keen to get the Minister's views on that.Hon SIMON WATTS (Minister of Revenue): Well thank you very much Mr Chair. To the member's question look I acknowledge that the member is not sitting on the Finance and Expenditure Committee but members within that member's party do and this aspect was heavily canvased as part of that select committee process. The select committee unanimously got to a position around that and I don't think there's much more value for me to cover other aspects in that regard."
Watts SimonHon SIMON WATTS (Minister of Revenue): Thank you Mr Chair. It's good to be back this morning. The question from the Hon Barbara Edmonds in regard to backdated lump-sum payment changes is not in scope of Part 3 of the bill that we're referring to at the moment. The questions in regard to reassessment and the implications around penalties that could or may apply—well obviously in circumstances where a reassessment is undertaken there is scope for the application of penalties if that reassessment derives a point of difference in which those penalties would be subject. So I don't think that aspect is surprising. We covered penalties extensively last evening as well but I'm happy to provide a little bit more context for the Hon Dr Deborah Russell in regard to the questions. I think it was in regard to clause 69 which is primarily around what that allows us in terms of the registration of those 20 to 25 entities. It ensures that they provide the appropriate level of reporting that allows the assessment of the tax. It also ensures that the appropriate information flows come from those entities to Inland Revenue in order to determine their taxable status. Overall the purposes of that—again consistent with other aspects of tax legislation—ensure that IRD can actually operationalise the implications of this legislation.
Russell DeborahHon Dr DEBORAH RUSSELL (Labour): Thank you Mr Chair. I admire the enthusiasm from the Government members and I'm hoping they're going to offer some calls on this rather important part of the bill.Just to remind everyone to where we'd gotten to. We'd traversed Part 2 which had a whole lot of significant changes to the main body of the income tax rules. We've now moved on to the Tax Administration Act which is not the content of the tax law but how we administer the tax law. Now one of the issues we traversed in Part 2—if you'll indulge me for a moment I will get to the relevant part within about 30 seconds—was the GloBE rules: the global anti-base erosion rules. One of the issues there was that the GloBE rules were being incorporated in our law by reference to the OECD rules so not directly incorporated into our law but actually our law is going to direct multinational enterprises and the like to go to the OECD website in order to work out how the law applies. And that was explained to us by the Minister of Revenue why we were doing it that way.But then looking at Part 3 which deals with the administration of tax I want to direct the Minister's attention to clause 69 inserting new sections 78H to 78J into the Tax Administration Act and that's on pages 76 through 79 of this rather dense and long bill that is in front of us. There's a whole lot of stuff there that isn't done by reference to the OECD rules. So on the one hand in Part 2 multinational enterprises are directed to the OECD rules as to how they should do their tax and on the other hand in Part 3 multinational enterprises are directed to our own law to describe how they should comply with the law as it is administered in this country.Now I don't think that's an inherent contradiction or anything like that; there'll be a reason for it. But what I would like the Minister to do is to give some explanation as to why in Part 2 it's by reference to the OECD and in Part 3 it is by putting the rules directly in our own legislation. Now this is the Tax Administration Act rather than the Income Tax Act but it is a particular set of rules there. I do want to come back on the content of some of those rules but in the meantime if the Minister could just give some direction or some explanation as to why we've got this difference between Part 2 and Part 3 and whether we refer to the OECD rules or whether we go directly to our own tax legislation. Thank you.
O'Connor GregTUESDAY 26 MARCH 2024(continued on Wednesday 27 March 2024)TAXATION (ANNUAL RATES FOR 2023-24 MULTINATIONAL TAX AND REMEDIAL MATTERS) BILLIn CommitteeDebate resumed.Part 3 Amendments to Tax Administration Act 1994 (continued)CHAIRPERSON (Greg O'Connor): Good morning members. Last evening when we were considering the Taxation (Annual Rates for 2023-24 Multinational Tax and Remedial Matters) Bill we were debating Part 3 the debate on clauses 65 to 77C Amendments to Tax Administration Act 1994 and also Part B of new Schedule 1C as proposed by Amendment Paper No. 20. The question again is that Part 3 stand part.
Watts SimonHon SIMON WATTS (Minister of Revenue): Thank you very much to the member Helen White for those questions. The member raises good points in regards to the implications and the uncertainty for those flood victims. The decision to extend to April was based on official advice and we believe that that will provide the adequate amount of time for those matters to be dealt with. For those that know people that are impacted by that or for those that are watching that are impacted by that I would encourage them to get in touch with Inland Revenue as soon as practical in order to ensure that the department is aware of their specific issues. But as I said the date extension is an extension and does recognise that that is a complex area.I think the previous question in regards to the implications of the interest deduction rules in regards to investor activity and first-home buyers—the aspects that have been cited acknowledge that there is some evidence to suggest that investor activity actually reduced in the housing market relative to the first-home buyers. I think some of the aspects that the member Arena Williams noted are correct. What is challenging though—and I think the member would also acknowledge that this is a complex system and there isn't simply just one aspect at play here. But the other aspects at play also included at that point the Reserve Bank changes around to loan-to-value there was also the implications in the changes around the Credit Contracts and Consumer Finance Act legislation. So while the member's right to cite that there was some change in that to definitively say that that's the result of one aspect over another is hard to quantify.
Taxation (Annual Rates 2023-24 Multinational Tax and Remedial Matters) Bill — In Committee—Part 2 (continued)
White HelenHELEN WHITE (Labour—Mt Albert): Thank you Mr Chair. I'm just going to ask about a couple of things. And I actually do want to indicate that there's more than that that worries me and that I'd like to ask some questions about. But the first is actually about the tax treatment of people affected by the North Island floods. I can see that there has been a decision to extend the deadline until April of this year and I'd like to ask the Minister whether he's considered whether that's actually long enough in the circumstances. It's quite complex going through that situation. It's actually something I'm seeing on the ground that people are very confused about what they are entitled to etc. So my understanding is that while there's some relief here which means that for example if you are bought out the treatment of the money if you are going to put it back into another property will be spread over five years. I am concerned that that process is taking longer than anybody would like and I'm concerned about that issue about how we arrived at that date. I know it was extended but obviously it's a moving feast.I'd also like to know about the comment that I've seen that there's future policy work recommended in this area and whether the Minister has any concern about that because my understanding is that this waiting until one of these bills comes out every year when we have an event—and basically reinventing the wheel each time—is seen as a problem. And I would like to know whether it was possible for the Minister to in this particular legislation look at something that was more generic. How far are we along the pathway to something that would work in more than one circumstance?I'd also like to ask about something completely unrelated which is—Hon Dr Deborah Russell: No no no. Don't. HELEN WHITE: What?Hon Dr Deborah Russell: No nothing.HELEN WHITE: I'd like to ask about de minimis tax because—[Interruption] I thank you. I'll sit down.
Williams ArenaARENA WILLIAMS (Labour—Manurewa): Thank you Mr Chair. I have a number of questions which the Minister of Revenue has not answered. I'm going to ask different questions. I need those answers for my amendments to Part 2 particularly to clause 8 the second amendment on my Amendment Paper in my name and to clause 9 the first two of the amendments which I have not spoken to yet. The questions that I posed to the Minister was the original intent of the brightline test and whether he had taken advice on the difference in achieving that policy intent that was introduced by the National Government in I believe 2015; between the difference in two years and 10 years. But I'll ask him these specific questions—and there are three—to help me clarify whether the amendments are still relevant.The first is: has the Minister received advice that since the changes made in 2021 were made—being the extension of the brightline test to 10 years and interest deductibility—first-home buyers have significantly increased their share of the housing market at the expense of investors and what was the effect of the Government's support for rapid increase in housing supply in that period as compared to the effect of the rules change?The second question I have for the Minister is: has he received advice about the Reserve Bank's lending data showing that during the period between August 2014 and October 2017 first-home buyers' share of total lending averaged 12 percent and investors' share averaged 29 percent and since the announcement of the brightline test extension and removal of interest deductibility in March 2021 the share of first-home buyers has averaged 20 percent and as of July 2023 that share was 25 percent? I ask that question because the share of total lending going to investors fell in that period to an average of 17 percent.And the third question I have for the Minister is: CoreLogic data on the types of buyers in the housing market in New Zealand show that mortgaged multiple-property owners—so those are property owners who we might consider to be property investors investors who are making money out of capital gain on property—the share for them of property purchases reached a peak of 29 percent in early 2021 before the two rules were introduced and has fallen in June 2023 to 20 percent. Is the Minister aware of that? I ask him because when he is providing the House with his policy rationale for a change from 10 to two years it's important to understand whether the Minister took advice on the impact of the change for first-home buyers as a proportion of the market as compared to property investors.
Watts SimonHon SIMON WATTS (Minister of Revenue): I'll just answer a couple of those questions as they were asked. The conversation from the Hon Dr Deborah Russell in regards to the definition of a fiscal year"—the actual definition in regards to that for the purposes of this legislation is actually defined in the OECD rules so that's that location. The fiscal year is obviously the 12-month period that will differ depending on a company or Government's structure. So in a New Zealand context for those people that are still staying with us and watching this at home the New Zealand Government's fiscal year is from 1 July to 30 June and that's what you refer to as a "fiscal year" versus obviously a calendar year or other aspects like that. So really it depends on the relevant balance date for the entities.In regards to the Hon Barbara Edmonds' questions around the binding rulings regime it's the same binding rulings regime that applies in this case as it does with other aspects. I know that the Finance and Expenditure Committee did consider this and obviously that's included in the select committee report so I won't repeat it."
Watts SimonHon SIMON WATTS (Minister of Revenue): I'll assist the member with some answers to some of those questions. The IRD guidance in regards to the definition of a main home" has the same definition as was originally the case in the legislation and the definition can be found on the IRD website and it provides some clarification around that. The same definition exists as it was originally.Camilla Belich: Yeah did you think of changing it?Hon SIMON WATTS: No the decision to keep the definition the same was the decision that we stuck by.In regards to the brightline test questions by the member there are a number of aspects there. We've actually made some changes to this where actually there is now just one test. Previously there were more than that and so that simplification aspect is now part of that.The question that was being asked—and we covered this a little bit before around the intention test and I think it is a fair question. The intention test still exists and so in effect it'll still catch those property developers that have an intent to develop properties. So those speculators that fit within that definition will still be covered under the intention test beyond the two-year period. So in effect that's not going to allow them to get out of their obligations in regards to that.The other questions were in respect of house-price impacts. Yeah look the reality is there's a huge degree of uncertainty in regards to the implications of this on house prices. I'm not going to make any other comments other than to acknowledge that there is a degree of uncertainty. However there are a number of factors at play which drive that price and we have embarked on a significant programme around increasing housing availability and it's a key priority for this coalition Government. So there is a number of factors as the member will be aware that implicate into the house-price conversations. The other aspect around deductions around new builds versus non - new builds—in effect you know quite simply we're flattening the overall playing field and there is a consistent rule in regards to those properties.And interest deductions as well which was asked. So the reintroduction of these deductions is from the 1 April 2024 and the questions I think that were raised before in regards to "Why aren't we doing a separate bill?" and "Why—"you know all of that stuff. The reality is we made a commitment around ensuring that they came into that effect and therefore by virtue of the timing that we wanted to bring this law into play it needed to be included as part of this current bill in this current legislation that we're discussing."
Williams Arena; Watts SimonARENA WILLIAMS (Labour—Manurewa): Thank you Mr Chair. Following on from my questions to the Minister about the brightline test which I am confident that he is working on and will soon provide me with answers to so that I can ask him about the amendments in clause 9 I would like to add one question to that which is does the Minister intend to reintroduce either in legislation or into Inland Revenue Department (IRD) policy the use of the intentions test?While the Minister's considering that—and I hope he will engage with me in back-and-forth questions about the intentions test—I will explain to the committee what that is. Historically tax legislation in New Zealand has treated gains from the sale of land or the sale of houses and real property as taxable income where that land was acquired for the purposes of selling it. So we still do this. There is no change to that by the brightline test. And that approach means that the capital gains made by property investors are taxed as income. So if you are engaged in a business where you buy and sell homes or buy and sell other land that will be taxable income because it is business income.However the intentions test that IRD used before the brightline test has been very inefficient. That is why IRD sought to move away from it in the first place because establishing someone's intentions when they're buying and selling property was essentially left up to the lawyers who were processing the transactions processing the conveyancing. You had to make a declaration about what your intentions were and what kind of investor you were. Obviously we've had some really good contributions from this side of the Chamber about the principles of tax fairness in this debate and one of them is that you shouldn't be able to easily avoid taxation or evade taxation.So if we were to return to an intentions test that would represent a step backwards in terms of the efficiency of our overall tax system and a return to a system which wasn't working in the first place. Because this brightline test that the Minister is reverting to a two-year test was introduced by a National Government and I'm interested in his views about whether he is returning to that policy.Hon SIMON WATTS (Minister of Revenue): I can assure the member that we still have the intention test and in effect that rule is in play—that is in regards to the way in which the taxpayer and their intent in terms of what they do. Obviously we've got a two-year brightline rule in place now but that rule has not gone away as a result of the changes that we've proposed in regards to this legislation.
Russell Deborah; Watts SimonHon Dr DEBORAH RUSSELL (Labour): Thank you Mr Chair. I know that these case managers have been in place for a long time. But the difficulty here is that when the Minister first mentioned case managers I can't recall the exact words the Minister said but the implication was that the case managers would be advising these MNEs—these large multinational enterprises—about where to find the law and how to apply it. Now I don't know but I sort of feel as though every small enterprise every small business in this country would like to have some easy on-hand advice from IRD as well. Many medium-sized enterprises would quite like to be able to get hold of some easy advice from IRD too and when we hear about the wait times on call lines—which you know happens; there are a lot of people who want to talk to IRD—it just seems to me that the way the Minister has described it and the way the Minister has described that these multinational enterprises will be informed about the OECD model rules does rather suggest that these large multinational enterprises are getting their own specialist tax adviser from Inland Revenue. So this is the little point of clarity I am really asking for. Let's take it from the top: we have a set of tax laws and all New Zealanders—well most people know where to go to access that tax law. But in this particular new clause that has been introduced to the bill—this new set of rules—instead of defining the tax law ourselves it's going to be defined by the OECD. So I asked the Minister where New Zealand's enterprises could get that information from. He said that their website was linked and in addition these large multinational enterprises have their own case adviser and the implication was that that case manager would be advising them quite directly about how to apply the tax law and that's not a service that Inland Revenue provides to many of its clients; in fact most people have to pay someone for specialist tax advice. So I am trying to find a little bit of clarity here on what these case managers actually do and in particular I want to go back to the question I posed a couple of calls ago: are they assessing the multinational enterprise's compliance with the law or are they advising the MNE on applying the law? Hon SIMON WATTS (Minister of Revenue): Thank you very much Mr Chair. I'm conscious of the repetition but again just for context for the member this team has existed since 1994—right? This is not a new concept—that was quite a long time ago—and the concept that IRD provides a range of taxpayers with advice and support in regards to their obligations around tax is not a new concept. That is the way in which Inland Revenue provides assistance to taxpayers at all levels and obviously it takes into account the needs and the resources around that. So I don't think there's much more to be said. Obviously if the member wants to arrange a time when I could take her through the organisational structure of Inland Revenue then I'm sure I'd welcome that and I could make time. Likewise the member could just google it and have a look online at the website.