Adams AmyHon AMY ADAMS (National—Selwyn): Thank you Mr Chairman. Good to take a call on this Part 1 of this Taxation (Annual Rates for 2018-19 Modernising Tax Administration and Remedial Matters) Bill. Often these bills come to the House and they're reasonably non-controversial affairs picking up a number of bipartisan changes that need to be made to tax administration and reconfirming the rates and quite often you will see Opposition support for them. But with this bill we can't do that because there are a number of quite serious changes and my colleague Andrew Bayly has discussed some of those and as he says there are others that we'll discuss when we get through to the significant restructuring of the PAYE system and how that will work.But the piece that I wanted to particularly raise in this first contribution comes back to what should be a reasonably formulaic part of the bill which is confirming the annual tax rates. Now in National we have a very strong and simple view that people should keep as much of what they earn as they can and the Government shouldn't be taking any more out of people's pockets than it actually needs to effectively and efficiently provide the services to the public. Now we can all debate exactly what that amount is but one thing that I think this House should be able to agree on is that those tax rates and the thresholds at which they apply can't be fixed in stone for all time. Like every figure in our economy or every figure in our society—whether it's the price of a loaf of bread your rent your car insurance fee your wages the cost of a cup of coffee—everything moves over time with inflation. It's well understood that for any cost to maintain its relativity it has to move with inflation and this House recognises that in almost everything it does. Almost every Government payment is linked to the Consumers Price Index and adjusted whether that's benefit rates or the superannuation rates or Working for Families—any number of payments we make sure they're updated for inflation.Yet when it comes to tax rates and when it comes to tax brackets the Government won't move them for inflation. Now why won't it do that? Well it's pretty simple: because every year the effect of inflation means the Government takes a little bit more tax without anyone noticing. So rather than turning around and saying Do you know what? We want to take more money out of your pocket and we're going to be honest about that and put up the taxes." they just say "Why don't we just let those figures stay frozen in time and then every year as the costs around us go up and the inflation pushes up wages and inflation pushes up costs we'll be taking a little bit more tax and a little bit more tax?"I want to explain very briefly what I mean by that. When the existing tax thresholds were last adjusted in 2010 there was about a $24000 gap between the average wage and the top tax bracket. The top tax bracket at the moment is at $70000; there was about a $24000 gap which meant that the average worker was well inside that. Now we're down to a $7500 gap and actually in just a couple of years the average wage earner will be on the top tax bracket because the Government has refused to move those tax brackets for inflation and refused to link them to inflation.Now National was the party that last adjusted the tax brackets. National actually legislated to adjust them again in 2017 but the first thing this Government did when it took office was cancel that. They said "No no no tax brackets shouldn't keep up with inflation because if we leave them frozen in time then we can take more money every year by stealth without New Zealanders being aware that every year we're taking more and more of their real spending power." Now that is just wrong.In fact the World Bank recently has come out in its report into Australia and said they should link their tax thresholds to inflation. I agree with them National agrees with them and we've announced earlier this year that our policy would be to do that. So when we are confirming the annual rates in this bill this side of the House won't agree to leave them frozen at 2010 rates and have the Government let inflation take more tax out of people's pockets.I've got an amendment in my name on the Table for this bill looking to amend clause 3 which does the very smallest of adjustments and says "Let's adjust them for the last three years of inflation let's move those tax rates." It's only the beginning; fiscally it's not a huge amount but when it becomes important is when that becomes the system under which we operate. Every three years the tax thresholds should be adjusted to take account of inflation. If the Government is being honest with the people of New Zealand about what it is taking the tax thresholds should automatically move with inflation and then the Government can have an upfront discussion about what extra tax it wants to take.So the amendment in my name would allow this Government to show good faith and say "We should adjust those tax thresholds for inflation we should move them up on a regular basis so that we're not helping ourselves to more and more by stealth." If the Government and the party on the Treasury benches want to give truth to their promise to be the most honest and transparent Government well here's a great example of how they could do it. Be honest and transparent when you want to take more tax. Don't freeze numbers at a 2010 level and let inflation do the work for you. We wouldn't allow wages to be frozen at a 2010 level. We wouldn't allow benefits to be frozen at a 2010 level. We wouldn't allow the costs of anything we do to be frozen at that level and yet this Government is happy to leave those tax thresholds frozen. If they don't move if they don't accept my amendment to this legislation then they are effectively saying to someone on the average wage that the Government thinks they should be paying the top tax rate in just a year or two's time.Now I don't think that's right. I don't think the average wage earner should be facing the top tax bracket. They wouldn't have under National they weren't under National and we've made it very clear that our policy would make sure that every single parliamentary term tax thresholds are adjusted. Now of course we can have a discussion and we will and we're having them at the moment around what taxes should be but they should be discussed and debated and put honestly in front of the people of New Zealand not by freezing a rate because you don't have—Hon Shane Jones: No we're investing in the regions: billion trees jobs.Hon AMY ADAMS: —the openness to actually say to New Zealanders what the tax rates will be. Now Mr Jones over there is barracking away which I find somewhat amazing because it's his wasting of money which is one of the core reasons this Government wants to take more tax off New Zealanders; $3 billion of pork barrel from that man is one of the main reasons this Government is looking to take more tax. If they just spent the money they had well and didn't have Mr Jones mulching seedlings because he can't organise himself to even plant a few trees then we wouldn't need to take more tax.So my challenge to the Government is this: how about you rein in the loose spending? How about you rein in the pork-barrel politics of Mr Jones the failed fees-free tertiary policy the 250-odd working groups that have cost hundreds of thousands of dollars? How about you rein that in get a bit of competence in your management and then let New Zealanders keep the money that they work hard for. Don't sit there and let inflation put up tax every year by stealth because they don't have the honesty to be upfront with New Zealanders and say "We want a bit more tax to fund Shane Jones so we're going to take it from you." Be honest; put indexation into the legislation. My amendment is a very small step towards that but without some signal in this legislation that the tax rates need to change for indexation this is a bill we can't support.I just want to finish by saying this in respect of tax rates: if National was the Government right now and the legislation we passed in 2017 hadn't been cancelled to fund Shane Jones' questionable spending habits around the country and his handing out of secret loans to private companies New Zealanders now would be paying a lot less tax. What are they facing under this Government? More tax higher rents higher petrol taxes impending capital gains taxes and inflation eating away the core value of what they earn. That is not right and that's why this side of the House cannot support the annual rates in this bill."