Clark David: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — In Committee 
Text is incorporated into the Bound Volume 
Clark David: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — In Committee 
[Sitting date: 18 September 2012. Volume:684;Page:5328. Text is incorporated into the Bound Volume.] 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 I am very pleased to take a call at this point as I had the opportunity in the previous debate but I think it is important to come back to the context for starters because we are talking here about a Government that is failing. It is failing in respect of having the worst economic growth record of any Government in 50 years. There are 50000 New Zealanders leaving annually for Australia there has been a 50 percent increase in unemployment and there are now nearly 50000 more people on benefits. That is because this Government will not tackle the big issues and Part 3 of the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill is another illustration of that. This part of the bill has more tinkering. 
We have here some positive streamlining. That is the best thing we can find in this bill. We can find no pro-growth tax policy we can find no research and development policy we can find no savings policy in this part of the bill and there are no changes to monetary policy of course. This is a Government that is failing. 
I want to question whether the Government can actually implement the changes. I would be interested if the Minister in the chair the Minister for the Environment would like to take a call on this and say whether the Government can actually implement the changes that it is proposing here in respect of electronic transactions. I raise the question because it was not so long ago—well it is actually over 6 months ago now—that John Key made his Valentine’s promise. John Key’s Valentine’s promise on 14 February of this year was to address the problems with the Inland Revenue Department’s computing system. The Inland Revenue Department’s computing system is not up to scratch. We know that. The Inland Revenue Department has been saying it for a very long time. And we know that tax policy is being held up because the computer systems—and I am quoting the Prime Minister here—cannot actually support radical changes from the Government. The Prime Minister on Valentine’s Day said: “You don’t want to be in a position where Parliament is held hostage to a lack of technology.” That is what the Prime Minister said. He told reporters that he did not want to be held hostage to a lack of technology. 
Well he is held hostage at this stage because this Government has not addressed the Inland Revenue Department computer system—a computer system that was designed in 1992 and apparently would cost somewhere between $1 billion and $1.5 billion to replace. I find that number implausible in and of itself. It is hard to believe that our computer system would cost that much to replace. We are not the only country in the Western World that has a tax system. 
We have not seen a plan yet from this Government as to how it is going to address these problems so how on earth can it convincingly say that it is going to implement even something like electronic filing? The electronic filing provision here listed retains I notice paper copies as well. I think that is probably because the Government is a bit nervous about whether these electronic transactions will really work. So I would be interested if the Minister in the chair could express some confidence in the ability of the Inland Revenue Department to deliver these changes. 
The other thing that is happening of course as this computer system struggles through is that the Inland Revenue Department is preparing for this new world but customer satisfaction levels are dropping. It is laying off staff around the country—42 people in the last 4 years down my way. It continues to have dropping customer satisfaction because everything is going on the phone. If you have a tax issue it is actually hard to find somebody these days who will service your needs. We all as taxpayers pay for the system but our need for service is not being met. 
There are advantages in having electronic returns so I congratulate the Government on recognising this at last. I guess one of the advantages of being able to put in electronic returns is that you can put them in more immediately. You can write them up straight away. If you are carrying around an iPhone or an iPad I assume you can write up your electronic returns straight away or that will be a provision I hope. The Minister might like to explain that as well and how immediate that is. I assume those forms will be online. You will be able to start filling them out. If you are somebody who perhaps suffers from memory loss if that is an issue that somebody struggles with you could— 
Dr Rajen Prasad 
: You can’t bank on it. 
Dr DAVID CLARK 
: You could not bank on it my colleague says but I hope that it is true that this will facilitate an easier filing of returns for people who struggle with a variety of issues not just memory loss. I was thinking about this as I flew up from Dunedin North the fine electorate that I represent—[ 
Interruption 
] In an aeroplane. Yes that is right. It was not a helicopter and I do remember that very very well. I was thinking about the advantages of electronic returns. 
The other thing that we are seeing as these computer systems struggle is that a range of other problems are starting to impact on the department. We had 70000 calls not answered in the lead-up to the last filing date. We have hundreds— 
Dr Rajen Prasad 
: How many? 
Dr DAVID CLARK 
: Seventy thousand calls unanswered—70000 calls. 
Kris Faafoi 
: Are you sure it wasn’t 50000? 
Dr DAVID CLARK 
: I am sure it was not 50000 Mr Faafoi. It was 70000 calls and I do remember. I do remember. We have hundreds of thousands of unprocessed returns—hundreds of thousands of unprocessed returns—in that department. I am sure we will hear more from my colleagues about returns. We have a system that falls over at crucial times and was declared by the Inland Revenue Department in many of its past briefings to incoming Ministers to be on its last legs. We have no plan but only talk of a $1 billion rebuild. We are not as I say the only country in the Western World with a tax system. 
The other point that I would like the Minister to perhaps address is the rumours that are swirling around about the rebuild of this computer system—presumably the computer system that files these electronic returns. There is a rumour floating around that there is a 1700-page draft report—a 1700-page draft report—on repairing this computer system. We have seen no action from the Government. There has certainly been no public announcement of a plan. 
Hon Clayton Cosgrove 
: It’s called a manual. 
Dr DAVID CLARK 
: It is called a manual—yes it is. But we have seen no public announcement. We have seen no commitment and I wonder whether even this 1700-page draft report—if it exists—will suggest what the next steps might be. Perhaps there will be another draft report. There are some consultants doing very well out of this. My colleague Mr Chris Hipkins pointed out not so long ago just how well the consultants there are doing. After pointing out that a million clients hung up before their calls were answered last year Mr Hipkins drew attention to the more than $125 million that has been spent in the Inland Revenue Department on consultants and contractors. That is unbelievable for a falling level of service which the public of New Zealand are getting sick of and which is simply not able to make the big tax changes that we would like to see: the capital gains tax the research and development tax credits—the things that would actually make our economy work rather than these smoothing gestures— 
Dr Rajen Prasad 
: Rats and mice. 
Dr DAVID CLARK 
: —the rats and mice that we find in Part 3 of this bill. I notice also that clause 131 notes that a taxpayer may apply for financial relief. That financial relief in the face of hardship in paying tax is another sensible clause in this bill. 
So the kind of tinkering that is in here most of it we do not object to. We just think that the really big changes could be addressed. Who knows the financial relief might be useful for somebody who has filed a false tax return who is then forced to repay some money and then whilst paying their debt to society is scratching around for some extra dough. So the clauses that are in this bill do seem sensible. Unfortunately they are only tinkering and they do not get to the heart of the issue. They do not address the real problems in our economy—the big problems—which the National Government will not address because it does not seem to have the wherewithal to address those things that would make our economy function properly. Thank you.