Dunne Peter: Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill — First Reading Second Reading In Committee 
Dunne Peter: Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill — First Reading Second Reading In Committee 
[Volume:647;Page:16284] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 Can I say to the member who has just resumed his seat that the changes on charities were hardly rushed. They began with a working party that was convened as long ago as 1988. That party then reported to the Government early in the new decade. The legislation setting up the Charities Commission was passed shortly thereafter after full select committee consideration. 
The problem that has emerged has been with the process taken to register the charities and a subsequent determination along the way that there was a potential gap in the law in so far as tertiary institutions were concerned that could have rendered them liable for taxation in a way that no one right back to the 1860s or 1870s had ever intended. So I debunk the member’s argument that these things were rushed through. These are consequences of changes and perhaps one could argue that in the implementation of those changes not all was done that should have been done. But it was not the fault of the original legislation. 
I was not going to take a call in this debate but I have been listening to it with some interest because an ironic sense of déjà vu is emerging through all of the speeches we have heard this evening. Essentially what we are hearing is a two-way argument about who is better at tax cuts than the other. The reality is that neither of the major parties has a particularly proud record in this area. I have been in this House long enough to see three rounds of personal tax cuts—that is in more than 2 decades and that is the core of the problem—the changes around the introduction of the goods and services tax in 1986 the changes that the National-United Government made in 1996 and now these changes. The ironic thing about them is that the 1996 changes were made in two stages and today’s bill is a three-stage bill. 
In 1997 the Government of the day to fund some of the commitments it made to New Zealand First repealed stage two of the tax bill it passed in 1996. Here we are today passing a bill that implements a three-phase tax cut. One side guarantees the sanctity of those cuts and the other is raising doubts. The irony is that that is the reverse position that both took in the 1996-97 debate which I guess goes to prove that no matter what happens the one certainty in life is that the tax debate is an on-going one. 
I think that there is a much more fundamental issue. Every decade we run up to the top of the cliff and have a huge cathartic experience about whether the country can afford personal tax cuts. The argument is always that the cost far outweighs the level of deliverable public expectation. The problem is not so much the size and timing of cuts themselves but the rarity with which they occur. If in fact we had a programme that saw more modest cuts being made on a more regular basis a lot of the pent-up pressure that we are now seeking to deal with and that we sought to deal with on the occasions of the 1996 and the 1986 cuts could have been avoided. 
The lesson surely has to be once this programme is put in place that firstly we should let it remain and secondly that it should not be 10 years hence that a further programme of tax reductions is considered because at that point all we will be doing is repeating the folly of the last 2-plus decades. That is what causes the debate the dilemma the argument and the sense that no matter what amount is delivered it will never be enough. It is simply because the expectation gap goes far beyond what is able to be delivered. 
So rather than throw these brickbats back and forward about who did what to whom and when we ought to be focusing on how can we move to a programme that sees tax cuts as a normal part of economic management and not as something on which one builds oneself up to a peak and delivers once every now and then. That will never prove to be sustainable. That will never prove to be a position where we can say “a reasonable measure of public expectation has been met.” We need to change our thinking. 
We need to redesign our tax system in such a way that it does lend itself to smaller more regular adjustments that are more affordable and that do enable Governments of whatever complexion to plan with some certainty and some integrity about the way they approach these issues in the future. Until we do that the debate we are having this evening will continue at periodic intervals. The role players will simply reverse their roles depending on their political circumstances. We will not be that much better off. We may feel short-term enthusiasm but nothing much will change. 
So I think that this Budget this bill does provide us with an opportunity to lock down a process of ongoing change and that is important. The worst thing we can do now is introduce more uncertainty into a system that already has more than its fair measure. So I support this bill. I support its passage and I support too the 1 October implementation date. New Zealanders should not have to wait for tax relief that is experienced once in a decade; probably two or three times in their working lives. We need to do much better than that.