Nash Stuart: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — Third ReadingText is incorporated into the Bound VolumeNash Stuart: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — Third Reading[Sitting date: 16 February 2016. Volume:711;Page:9035. Text is incorporated into the Bound Volume.]STUART NASH (Labour—Napier): What you have just heard there is a very short speech that was filled with political-speak. Let me just translate that for those who were listening and are wondering what they had just heard. Minister Woodhouse talked about fine-tuning. What that really means is tinkering around the edges. Minister Woodhouse said that the bill “provides certainty for all taxpayers.” What this actually means is that it entrenches inequality and inequity. Minister Woodhouse said that it is a “much more workable system”. What that means is: “We can’t be bothered dealing with the really big issues.” And finally Mr Woodhouse says “wide consultation”. What that really means is that we spoke to the big-business end of town to ensure we got their support.Hon Member: So cynical.STUART NASH: Cynical? A realist; a pragmatist. I am going to be very interested in that member’s contribution because he sat on the select committee and he has been a part of a whole suite of tax bills that have come through the Finance and Expenditure Committee that are no more than tinkering around the edges when we have a number of really big issues that we face as a country and an economy.Labour does support the Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill for a number of reasons. First and foremost as the Minister of Revenue said what it does is it amends a whole lot of other bills where there are errors and omissions and that is important to maintain the integrity of the tax system. We also support this bill because anything that can be done to improve research and development spend or get firms thinking about research and development we would like to encourage.But I must say that this bill has really missed a trick. The Government has really missed a trick with this. There is something called the Kiwi Dream. We all know about it we have all heard about it we all grew up dreaming about it ourselves. What that Kiwi Dream consists of is being able to afford a house to get a good job and to bring up a family in a society that is fair and equitable. It is what is in our DNA. It is what we like to think of as what makes us Kiwis. It is what we like to think the international community thinks of us as Kiwis.But that Kiwi Dream is fast disappearing and I think the tax system is one of the major drags on our economy that is fast eroding this Kiwi Dream. Let me tell you why. First and foremost the Minister talked about the fact that the tax rates are going to remain the same. When I spoke at the select committee the Minister said: “Mr Nash wants to increase taxes.” Well I can tell you that as the revenue spokesperson I would love to see taxes drop; I really would. But one thing I would like to see more than that is a really equitable tax system: a tax system that is fair that treats every taxpayer fairly—one that if you make money you pay what you can. That is all—no more no less. If it is income coming in then you pay tax.What we really need to do is take a really good hard look at our tax system—take it from a 20th century model which I do not think is working particularly well and drag it into the 21st century. That does not mean that what you do is you whack up income taxes and say: “That’s that all settled it works.” When Mr Woodhouse says Labour wants to increase taxes let me say here for sure: we would love to decrease taxes but what we need to do is we need to get it right and we need to treat income the same no matter where it comes from in my view—no matter how you earn that income. We need to get that sorted but we have not done that.The second thing is research and development. If we want to compete on the global market then what we need to do is harness the intellectual capital that we have as Kiwis. This is how we are going to realise the Kiwi Dream. This is how we are going to get smart Kiwis who were educated hopefully under Labour without coming out with a massive student debt and they have got to go overseas in order to pay it and then not come back if they cannot afford to. This is what we have got to do—we have got to get our companies up and running and creating an environment where research and development is at the forefront of everything they do.The problem we have got at the moment—and Mr Bishop knows this—is our research and development spend is one of the lowest in the OECD and that is wrong. We really need to address that. So although this bill is called the Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill there is actually not much in here for research and development.There was a real opportunity here to be big to be bold and to take something to the market that says: “You know what? We understand where our competitive advantage lies. We understand what Brand New Zealand is and we know what we need to do to compete on the global stage.” We have to be smarter we have to be faster and we have got to do it in a way that Kiwis earn decent wages on a sustainable basis and that values the sort of education that we know we have the ability to provide in this country. The way to do that is to provide an environment—a legislative environment but also a business environment—that encourages research and development. I just do not see this bill doing that.I thought that the National Party always held itself up as the party for business but the reality is—if you look at the reality over the last couple of generations the party for business the party under which businesses have really grown is actually Labour. Labour is the party that is aspirational for businesses and under which businesses do well. When businesses do well Kiwis are employed and when Kiwis are employed that Kiwi Dream does not become just an aspiration; it becomes a reality.That is who we are as New Zealanders. That is what I want for my four children and I suspect it is what we want for all New Zealanders growing up. And unless we create the sort of business environment that encourages New Zealanders to be entrepreneurial it will not happen. What will happen is our best and our brightest will head overseas. There are many countries—including one across the Ditch—that actually value research and development in a much greater way than we do in New Zealand.Alastair Scott: They’re all coming here. The Aussies are coming here.STUART NASH: And imagine how many Aussies would be coming here if we had an environment that created and fostered entrepreneurship. They would not even have left in the first place. But imagine how many would be coming back from London if we were talking about a bill now that provides the sorts of incentives that they get in Australia for research and development.I think what we would see is a flood of educated experienced Kiwis coming back and setting up businesses here because they would finally be saying: “You know what? I’ve wanted to come back to New Zealand for so long; now I’ve got a reason to.” But this bill does not give Kiwis a reason to come back and that is a real shame. It is a real shame and it is a missed opportunity.The other thing I would say is Mr Woodhouse—he thought that he had a problem when he left a portfolio where there was a $10 million blowout in the current HR bill and—what was it Mr Robertson about an $80 million blowout in the child support system?Grant Robertson: About $130 million.STUART NASH: About a $130 million blowout in child support—well sorry a $10 million blowout in the police. He has come across to a portfolio where they are in trouble in a lot of their IT projects. A $130 million blowout is a significant amount of taxpayers’ money. Imagine what we could do with $130 million in terms of research and development. Imagine what we could do if we put $130 million into incubators into fostering business growth into saying to our young people: “Come back because we’re going to support you.” But $130 million is not that much when you consider the Business Transformation project which is looking at a budget of a billion dollars—a billion dollars. We have got to get this right.But let me wrap up by just making three points—reiterating my three points. First and foremost the Government really missed a trick with this bill. We would have loved to see something brought to the Finance and Expenditure Committee that really drove innovation and research and development in a way that made a significant difference and was a reason to bring Kiwis back. Research and development is vital to the growth of an economy like ours.Secondly the Government cannot continue to tinker around the edges with the tax system in the way it is doing at the moment because it solves nothing whatsoever. It just ends up annoying people and it just perpetuates that inequality and inequity that exist in our tax system. Again the Minister missed a trick but having said that he did not bring this bill to Parliament so I will be interested to see whether Michael Woodhouse’s legacy is as someone who takes the bull by the horns and drives that innovation forward in the way that most of us know it should be.The third point I would like to make is that Mr Woodhouse does have his work cut out. The Inland Revenue Department is spending a significant amount of money on various IT projects. We are keeping a very close eye on them because we cannot have another blowout to the tune of $130 million on a system that now has a budget of a billion dollars. We are supporting this bill—give me 30 seconds Mr Bishop; your time is coming—we are supporting this bill—Mr DEPUTY SPEAKER: You have got 24.STUART NASH: Twenty-four seconds? We are supporting this bill but we just thought it could have been so much more aspirational. We thought it could have grabbed that Kiwi Dream made it aspirational reached for the stars and made a real difference to those whom we know the tax system could. This does not. Thank you very much.