Clark David: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — Second Reading 
Text is incorporated into the Bound Volume 
Clark David: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — Second Reading 
[Sitting date: 02 August 2012. Volume:682;Page:4269. Text is incorporated into the Bound Volume.] 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 The Taxation (Annual Rates Returns Filing and Remedial Matters) Bill follows neatly on from the last that we have debated and that is because it also is about tinkering. It is an omnibus bill as the Minister of Revenue has told us and it does some worthy things—I will not deny that. The Minister is striving to ensure that the tax system we have has loopholes plugged. He is making some useful flip-flops on KiwiSaver and he is tightening up one or two things that it is good to address. 
The submitters to the Finance and Expenditure Committee which was well run by members opposite made a number of salient points and so we had some general consensus around changes that should be made. We heard from Mr Crooks Mr Gilchrist Mr Lay Buddle Findlay a coalition of insolvency practitioners Contact Energy Ltd the New Zealand Law Society the New Zealand Computer Society PricewaterhouseCoopers the Corporate Taxpayers Group Gerry Rea Partners KPMG the New Zealand Bankers Association and so on. You get the picture. These were a worthy group of submitters who had given this bill full attention. So I think it is fair to say that technically it is a very competent bill and the Labour Party will support it on that basis. 
However the thing this bill does not do is address the real problems with our taxation system. This bill does nothing to address the 4 percent drop in revenue since this Government came to office 4 years ago. 
Hon Dr Nick Smith 
: The GFC. 
Dr DAVID CLARK 
: The global financial crisis as the Hon Dr Nick Smith points out did have an effect on the tax take. The member is quite right. The Inland Revenue Department attributed 1.5 percent of the drop in tax take of a 4 percent drop to the global financial crisis. The other 2.5 percent it attributed to policy changes. 
We know that the biggest change in recent times is the tax changes of 2010 that the Government made. They have seen Government revenue plummet and this bill does nothing to directly address that. Sure it stops a few loopholes. It does make some small amount of difference but no measurable difference in that respect. The finance Minister continues to describe those changes made in 2010 as broadly fiscally neutral and with that—we know he takes some licence from his surname—he is really redefining the English language in that respect. The word “broadly” has been given new meaning I would suggest because “fiscally neutral” usually refers to the forecast period which is a 4-year period. Now the Minister is referring to the “business cycle”. He has stopped saying that it is fiscally neutral; he has started saying it is broadly neutral over the business cycle. 
This is evidence of a Government that is struggling. It is struggling in this area. It does not have pro-growth tax policies and so the investment signals that people are getting encourage them to put money into the speculative sector and not into the productive sector. This is something that needs to change. This is not addressed in the bill in any sense really other than stopping some loopholes which again could be speculative but are probably not productive. It does nothing to address that. 
It also does nothing to increase savings. We need a universal KiwiSaver. This bill does raise the employee contribution rate for KiwiSaver from 2 percent to 3 percent. National has been flip-flopping all over the place on KiwiSaver. Only 2 years ago I will remind members of this House National cut the employee contribution from 4 percent to 2 percent. So it has gone down from 4 percent to 2 percent and now the Government is putting it back up from 2 percent to 3 percent. It is all over the place. The Government has more positions on KiwiSaver than the Kama Sutra I would contest. 
We see that the Government is tinkering with savings but it does not really have a vision for this sector. The minimum wage increase that my member’s bill puts forward would assist with savings policy because it would ensure that hard-working New Zealanders could make contributions to this KiwiSaver scheme addressed in the bill. 
We know we need pro-growth tax policy. We know we need savings increases. If we look across the Ditch to Australia we see it has $1 trillion in its superannuation scheme looking for a home—looking to support businesses. We have nothing like that in New Zealand. Muldoon scrapped it. A previous National Government leader scrapped this scheme and if we had it today we know we would be in a much better position. We would have greater capital depth in this country. But this bill does not directly address that problem. All it does is correct a few loopholes. The research and development tax credits which could change it are not in there nor is monetary policy change to support our exporters. 
Why are we not getting that? Why are we getting this kind of bill? I want to contest that it is because we have a problem with the Inland Revenue Department. We have a computer problem in the Inland Revenue Department that this Government has not yet dealt with. We have computer systems that are on their last legs. I want to quote from the Prime Minister who said in February this year that tax policy is being held up because the computer systems—and here is the quote—“can’t actually support radical changes from Government.” This Prime Minister here—the National Prime Minister—says that his own tax department cannot actually support radical changes from Government. This is the Prime Minister of this country saying that it cannot make significant changes that will be of benefit to our country. This is really troubling stuff. “You don’t want to be in a position where Parliament is held hostage to a lack of technology.” Who said that? That was the Prime Minister. 
Chris Hipkins 
: The Prime Minister? 
Dr DAVID CLARK 
: Yes. He said: “You don’t want to be in a position”— 
Hon Trevor Mallard 
: The current one? 
Dr DAVID CLARK 
: —the current Prime Minister—“where Parliament is held hostage to a lack of technology.” That is precisely what we have got. That is why we have got this watered-down legislation. That is why we have got legislation that is not going to make a difference to New Zealand. That is why our economy is in the doldrums. This is what he told Parliament. 
We know that when the Government attempted to do something about this—it was told when it first came to office that this system was on its last legs—Mr Dunne received that briefing and the department did start to try to address some of the issues. It made a $21 million false start—a $21 million false start. That is taxpayer money that went into a system. I think it did the right thing in pulling out by all accounts—it went nowhere. But what has it done since? We have no plan as to how this tax system is going to be fixed. We have the ageing FIRST core computer system now more than 20 years old. That was built in 1992 before Google and before Facebook. This is the system that we are reliant on as a country to ensure confidence in our tax system and we have a Prime Minister who tells us we cannot rely on it. 
I want to say that we are in a dire position and that is why this Government is reduced to tinkering on tax policy. Partly it does not want to address the big issues but partly it is hamstrung because it does not have a clear plan as to how it is going to get the systems in place. It is about time the taxpayers of New Zealand were given a clear picture of how this problem is going to be addressed. 
This bill does raise the employee contribution for KiwiSaver from 2 percent to 3 percent after National wound it back from 4 percent to 2 percent previously. It is also true that the big ideas that the Government has are reduced to things like the paper boy tax. We know that that was the big idea in the Budget from the Government. This is along similar lines. We have an omnibus bill. It is worthy and it closes a few gaps but it really is not going to address those big issues. The tax switch which all our hard-working New Zealanders are hurting from is still in place. The top 10 percent of New Zealanders got 44 percent of the value of those tax cuts; the bottom 20 percent got about 2 percent of the value. We have got a tax system that is not fair and we have got a computer system that can hardly keep up. The Inland Revenue Department computer upgrade we are told is going to cost $1.5 billion—$1.5 billion this new computer system—and yet we do not have a timetable and we do not have sense of who is going to build it what it is going to look like or how it is going to give us confidence as taxpayers that our tax dollars are being properly collected. 
We have a Government that needs to get its act together. We need this Government to get its act together to get our tax system together so that we can actually make the changes that will take New Zealand ahead as a country. Then we can stop our workers flying away to Australia because there are no prospects here and because the tax system cannot handle pro-growth tax policy. We need to make a difference. I contest that the National Government is not on top of this and it must get up to speed and fix this issue.