Katene Rahui: Taxation (Business Tax Measures) Bill — First Reading 
Katene Rahui: Taxation (Business Tax Measures) Bill — First Reading 
[Volume:652;Page:1088] 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 There is no question that the investments that Aotearoa makes in small and medium sized enterprises have been increasing over recent years. Since 2006 the number of small and medium sized enterprises has increased by 2 percent while the number of people employed by those same enterprises has increased by a massive 18 percent since 2001. Indeed the economic landscape of this country is dominated by the impact of small to medium sized enterprises. Within this we know that as of 2007 the total value-added profit produced by Maori businesses grew to approximately 2 percent of New Zealand’s GDP compared with 1.2 percent in 1996. Building resilient businesses which have the internal fitness to stand up to the ongoing financial market instability and the heightened risk of economic vulnerability is therefore of importance to us all. 
Just how bleak the prospects look for some of our small to medium sized enterprises is seen in the recent quarterly survey of business opinion sponsored by the New Zealand Institute of Economic Research. The survey was sufficient to shock the sector into action. Forty-four percent of companies reported a drop in activity throughout the December quarter—the worst result for close to 40 years. The effects are immediate. About a third of firms predict they will have to cut staff by the end of March 2009 compared with just 7 percent in the last quarter. The signs are all there for hard times ahead. 
So it was in that context that my colleague Dr Pita Sharples just 2 weeks ago called Maori business experts tribal entrepreneurs and whanau leaders together to consider ways to insulate and protect the Maori economy from the impact of economic recession. That esteemed group had just 2 hours to come up with possible solutions. It was a challenge that from all accounts they rose to. Out of that session of the Maori economic summit came a raft of suggestions including the removal of tax for small and medium sized businesses to keep cash flowing and a call for Maori to concentrate on skills training where there are gaps in the labour market. So here we are today considering a host of amendments to current and proposed tax laws to reduce business compliance costs for small and medium sized businesses. The package includes raising the reporting threshold on PAYE fringe benefit tax and GST and introducing simplified rules for deducting legal expenditure. Importantly the package being debated today will instigate changes to reduce the tax liability faced by small and medium sized businesses thus assisting with cash flow. 
This is a big day for the Maori Party. In our policy manifesto we made the commitment to incentivise small businesses to grow. We signalled that unnecessary compliance costs would be reduced. We noted that we would invest in strategic alliances across central and local government industry business and Maori communities. The particular priority of the Maori Party’s business policy is to support the development and innovation of small businesses including the minimisation of taxation and compliance costs. Today’s legislation sees many of these great ideas come into fruition. This bill is another illustration of the concept that what is good for Maori is good for the country as a whole. The assistance package brings into swing some 18 initiatives that will help small to middle sized enterprises weather whatever storm awaits. It is designed to take the pressure off the sector by protecting businesses from suffering when the cash flow is scarce by building capability to withstand shrinking markets and by focusing on tax cash flow and regulation. It is all about building confidence in the sector. 
In this sense the acclaim from Professor Massey director of Massey University’s New Zealand Centre for SME Research has gone down well. Professor Massey estimates that the sector will achieve efficiencies of up to $480 million which will be effective immediately in easing a situation where cash flow is tight while also preparing for the long term. We welcome this package today as an innovative and comprehensive approach that ties together many separate strands of opportunities to act as a buffer against the worsening fiscal position. 
A fortnight ago at the Maori economic summit the chief executive officer of the Stock Exchange Mark Weldon made the point that this is the time to look beyond conventional methods of economic stimulation. The 18 steps encompassing tax-related charges trade finance disputes tribunals and faster payments do exactly that. There are business-related tax deductions and compliance thresholds are raised the export credit scheme is expanded the scope of the disputes tribunal is expanded and business advice services are extended. There is also the prompt payment requirement. Another initiative mooted at the Maori economic summit was that small firms be able to defer their provisional tax payments for 3 years as a specific measure to help those firms retain staff. The package does not go as far as that but it does amend the provisional tax uplift rate with the argument that the threshold could be reduced or eliminated so reducing the magnitude of a taxpayer’s provisional tax payments. 
Finally I take this moment to acknowledge Nga Kanohi Marae o Wairarapa that yesterday launched the marae-based trade training programme. The programme invites nominees from 11 marae on to a 3-year programme funded by the Ministry of Social Development to provide young school-leavers with the skills to enter the trade industry. The programme is designed for rangatahi who may be at a loose end but who are committed towards making a constructive contribution to their communities. Alongside developing confidence in work readiness the programme will also nurture the trainees in upholding the mana of their marae. I wanted to celebrate their success in talking to this bill as I believe that initiatives such as trade training are another key component of what we can reasonably expect as a package to help our communities see out the recession. With the prospect of jobs dwindling the probability that many Maori young people will be disproportionately represented amongst the unemployed is high. We need to look again at our schools and our tertiary training providers to ensure that if students are having longer time in study or in school their experience is meaningful and will lead towards enhancing their employment prospects. We support this bill at its first reading and will welcome any more innovative proposals that emerge at the select committee consideration. Kia ora.