Peters Jim: Goods and Services Tax (Exclusion of Rates) Amendment Bill — First Reading 
Peters Jim: Goods and Services Tax (Exclusion of Rates) Amendment Bill — First Reading 
[Volume:619;Page:14636] 
JIM PETERS (NZ First) 
: 
 I am very pleased to see Paul Adams here tonight because surely he must be responsible for that “road to Damascus” experience of his leader who in 1986 voted for the present legislation and now some years later is against it. So I tell Paul Adams that that is good work; it has been a remarkable conversion on the part of Peter Dunne. 
New Zealand First believes that this bill should go to a select committee. The reasons for that have already been covered by both the National Party speakers and by Dr Cullen. The very issues that have been enumerated particularly with regard to the uncertainty as to what local bodies charge for are reasonable grounds in our belief for further discussion by a select committee. 
Secondly I have already pointed out to Mr Baldock—and I am rather surprised that the local government spokesperson from Tauranga is not presenting the case but maybe a council up there does not see things his way—that this bill is incomplete and again for the very reasons that have been advanced by Dr Cullen. There is much more about rates that could be debated. We know that this has been a long-term issue. The Kaipara District Council under Mayor Peter Brown throughout the 1990s strongly advocated that this was an improper impost on his council. In the material that has come from Grey Power which I acknowledge his comments were there year after year. 
 Others councils have felt the same. The Ministers know that Local Government New Zealand has had a very firm stance on the issue as have some major authorities and they have challenged Governments in the past about the issue of adding GST to rates—a tax on tax. By the way it sounds good; it is a slogan but as Dr Cullen has said “It means what?”. Both Governments—the previous one and the current—have taken a very strong line that rates are a charge for goods and services supplied by local authorities. We know that this view was reinforced in the 1996 amendment Act which introduced a new financial management regime that attempted to link strongly the cost of activities for groups of persons who were receiving a specified service. That was really the start an indicator as to where the service lay. 
The amendment Act also added the actual tools—that is the extent to which it was efficient and effective to fund any expenditure needed by a funding mechanism and so on and there was a further development of thinking about rates. 
But throughout that time there was an understanding in the local government arena that rating would be looked at properly. However the Local Government Act 2002 did not do that. It merely looked at the process. The reason New Zealand First strongly supports the referral of this bill to the select committee is that it is entirely appropriate notwithstanding the ill-informed nature of Mr Copeland’s bill that rating be discussed. It was not discussed in 2002 in this House. I have been back over the speeches made then. The legislation was confined to a fine-tuning a tinkering with the process rather than looking at the real nature of rates as a mechanism for local authorities. 
If we are really interested in issues of transport—and we know that many rural authorities spend 60 to 70 percent of their money on roads and transport and communication alone—then that is another reason why rating needs to be examined if we are ever going to get the wider framework of our rural roading structure together rather than just depending upon rates as they are now to provide the main sustenance for that roading network. Those issues need to be fully examined if or when this bill goes to the select committee. 
We know that in the High Court and Court of Appeal cases with regard to the Wellington City Council which took this issue on at a higher level the court stated finally at the end of much legal discussion that a democratic council decision to rate properties in a particular way was a tax and in that way further defined the issue. We are also aware that the Inland Revenue Department has changed its thinking slightly on the issue with regard to rate penalty charges in terms of its refusal to allow councils an input tax claim for the GST previously paid on rates that are omitted or postponed. So they do not quite have the clarity and the intensity with regard to rates that existed hitherto. New Zealand First strongly supports this bill going to the select committee. The time is highly appropriate. We should not just discuss GST on rates but the whole nature of weighting as a mechanism in the community and to that degree we believe that this deserves a further hearing and submissions made by the wider public.