Taxation (Annual Rates Maori Organisations Taxpayer Compliance and Miscellaneous Provisions) Bill — In Committee 
Taxation (Annual Rates Maori Organisations Taxpayer Compliance and Miscellaneous Provisions) Bill — In Committee 
[Volume:607;Page:4221] 
Taxation (Annual Rates Maori Organisations Taxpayer Compliance and Miscellaneous Provisions) Bill 
In Committee 
Debate resumed from 6 March. 
Part 2 Amendments to Income Tax Act 1994 ( 
continued 
)  
GORDON COPELAND (United Future) 
: 
 I am surprised that I have 4 minutes and 30 seconds remaining because I think I had completed less than one sentence when consideration of this bill came to an end on Thursday 6 March. I was then speaking to clause 68(2) and the rate of 19.5c for Maori authorities. 
By my own count on at least three occasions Dr the Hon. Lockwood Smith has challenged parties on this side of the House to name one person who will benefit from this change in tax rate who is not a Maori saying that if we can do so he will publicly apologise to the House for insisting that only Maori will benefit from that provision. I personally know one such person. He is I believe of Irish ancestry but in any event he is certainly not a Maori and my contact with him was precisely because of his status as a shareholder and beneficiary of a Maori authority. He is a Catholic priest by the name of Monsignor Patrick Cullen. My instincts tell me that there are probably many Maori authority beneficiaries who are of Asian European or Pacific Island ancestry. But the member’s challenge was quite specific—namely that if we could name one person he would publicly apologise and Dr Lockwood Smith is an honourable man. 
Today I want to ask National Party and New Zealand First Party members to take a call and give a yes or no answer to a straightforward question. My question is this: as a matter of tax principle do they believe that members or beneficiaries of family and other trusts Maori authorities and superannuation funds should pay tax on income arising from those sources at their personal marginal tax rate? If their answer is yes then for them to select out just one of those groups—namely the Maori authorities—is to select on the basis of race. That is the very thing they have falsely accused the Government and United Future of doing. 
On the other hand if their answer is no then I will personally do my part to ensure that their policy in that regard is made known to Business New Zealand representing 74000 businesses in this country and who do support the principle in this bill; the Investment Savings and Insurance Association of New Zealand which invests the superannuation savings of probably around 500000 working New Zealanders; and the 150000 or more New Zealand families who have established family trusts. The 19.5 percent rate in clause 68 has been struck precisely because it is the marginal tax rate of 90 percent of the members of Maori authorities. In principle it has nothing to do with their race and everything to do with their personal marginal tax rate. 
I want to speak further to clause 68 and to address some of the comments of the ACT members. Dr Muriel Newman and Gerrard Eckhoff who have also claimed that the 19.5 rate is race-based. I must say I was amazed to hear that because the ACT spokesperson on taxation Rodney Hide is a member of the Finance and Expenditure Committee and expressed himself to be in favour of that rate. If one reads the committee’s report one sees that a minority view claiming that that provision is race-based was filed by New Zealand First and National but not by ACT. I want to draw members’ attention to the commentary on the bill where that is clearly set out. 
I guess my amazement at hearing Rodney Hide’s ACT party colleagues taking an exactly opposite point of view is based on my fairly short experience of belonging to a caucus that takes a “united” and “future”-looking view of these matters whereas consistent with its libertarian ideology it appears that in the ACT party each individual member does what seems right in his or her own eyes. 
BRIAN CONNELL (NZ National—Rakaia) 
: 
 The more I listen to this debate the more pessimistic I become about it. In particular I want to focus on clause 24 and start by saying: “Here we go again! This politically correct Government is doing deals for its Maori mates and to hell with what the majority of hard-working Kiwis think.” In any other Western democracy this would be called apartheid. This creeping crawling insipid political correctness that has pervaded this country and that this Government champions is soul-destroying. Doing special deals for Maori is highly divisive and the day will come—and I think it is coming soon—when we will see a significant backlash to this type of deal. A special tax deal like this is not the Kiwi way. Our society has developed out of a sense of fair play and this bill is not a fair go to our fellow Kiwis. If one offends that sense of fair play—as I believe this bill will do—one will suffer the consequences. I say to members opposite that that day is coming quickly and I think it will be very apparent in the next election. 
When I read the select committee report I saw that the majority of committee members argued that the lower tax rate was being introduced because of the lower income of authority members. How very convenient that argument is! If the Government is really solely concerned with low-income earners why is it only Maori who will be favoured with this type of tax treatment and not Pacific Islanders Asians and white New Zealand business people? It is not even supported by the Federation of Maori Authorities. The answer of course is that the Government cares more about its mates. This politically correct Government is subjugating the rest of New Zealand to a treaty that was signed 163 years ago rather than having the strength of character to interpret the treaty just as it was written signed and understood by those who were present. We have already done more than most Western democracies. 
I say to members of this House that this is not a time for separate deals; it is a time for coming together. There should be one standard of citizenship for all New Zealanders. Did members of this House ever think that there would come a time in this country when they would see two tax systems based on race? I never thought I would see this day. The Government is quite unashamedly favouring one race at the expense of another. That is not a fair go. If the Government had the courage to deal with the Treaty of Waitangi gravy train and the absolute abuse therein this situation would never have arisen. It might interest members to know that under the settlement process to date one fifth of all settlement moneys has gone to consultants and lawyers—not to the Maori beneficiaries who were meant to be getting it. If our economic growth—and here is something that Dr Cullen might want to think about—kept pace with the Treaty of Waitangi gravy train he would not have the dilemma about where we rank in the OECD because we would be leading it. 
Let us look at the advice the select committee received from such notable authorities as Chen Palmer and Partners and PricewaterhouseCoopers. Chen Palmer said the changes would provide a $70 million windfall for Maori authorities in the fishing industry alone. They went on to say something that I find extraordinary—that discrimination based on race is contrary to the New Zealand Bill of Rights Act. The majority of members on the committee conveniently ignored that. 
Let us look at some of these “poor” Maori businesses—the emphasis here is on “poor”. The Waitangi Fisheries Commission controls about one-third of New Zealand’s fishing quota. The Crown Forestry Rental Trust has only a “meagre” $200 million worth of assets. 
Hon Dr MICHAEL CULLEN (Minister of Revenue) 
: 
 There was a lot of sort of hatred and almost self-loathing coming through that speech. Let us just deal with a few facts. Firstly of course companies are not taxed at 19.5 percent. The select committee changed that rate to 33 percent for wholly owned companies. Various parties in this House have suggested that they would pop up and move an amendment to lower the rate back to 19.5 percent but nobody has actually done so I notice. Mr Morgan will remain unsatisfied on that point because he could not find any stooge in the House to pick it up and move the amendment for him. 
Secondly in respect of the so-called separate tax regime there has been a separate tax regime for Maori authorities since 1939 in this country—long before the term “politically correct” was even thought of. Indeed it was not long after the National Party was thought of which is one of the worst mistakes we ever made in New Zealand politics. There have been separate tax regimes since 1939. For most of the last 10 years or more Maori authorities have been overtaxed compared with the rest of New Zealand income-producing assets and organisations. Most Maori authorities have ended up being double taxed due to the absence of an imputation system and with two 25 percent rates. [ 
Interruption 
] There is a difference and the difference is very simple. The difference is that people cannot leave Maori authorities. If one is a beneficiary one’s assets are locked into a Maori authority and one cannot exit from it. It is not like holding shares in a company. It is not like being a member of those wonderful family trusts that National Party members all set up as a means of tax avoidance. That is what they exist for. [ 
Interruption 
] I bet Dr Lockwood Smith does not have a family trust he can set up because it is not permitted to have one for one person. 
Rodney Hide 
: I raise a point of order Mr Chairperson. The Minister has accused National Party MPs of setting up trusts to commit a criminal act—tax avoidance—and I suggest that you put him right into order. 
Hon Dr MICHAEL CULLEN 
: Speaking to the point of order Mr Chairperson I want to say that tax avoidance is not a criminal act. Tax evasion is a criminal act. 
The CHAIRPERSON (H V Ross Robertson) 
: I thank the honourable member. It is a debatable point. 
Hon Dr MICHAEL CULLEN 
: So we have organisations whose members are locked in. Many of those members by the very nature of Maori authorities are very small shareholders because Maori authorities have thousands and thousands of members. If those authorities were taxed at 33 percent the taxpayer would have to fund a very large amount of administration to deal with thousands upon thousands of rebates of $10 $15 or $20 a year. So stupid are Dr Lockwood Smith and Mr Connell that they would actually like to pay more taxes to fund the Inland Revenue Department to have hundreds of extra officials so that we can deal with tens of thousands of rebates of $10 or $20. They call that being non-politically correct. I call that being utterly stupid which is why the Inland Revenue Department and Treasury were the source of the suggestions about the changes to the taxation of Maori authorities. 
This is indeed designed as an issue both of equity and of tax simplification. The select committee decided that in terms of equity it was fairer to tax wholly owned companies at 33 percent where they would be competing with other companies being taxed at 33 percent. But Maori authorities are unique. It is true that no other country in the world has a separate tax regime for Maori authorities. There is a reason for that: this is the only country in the world that has Maori authorities. 
CRAIG McNAIR (NZ First) 
: 
 I do admire the Minister of Finance. He is able to make an argument about a tax system such as this one based on race sound quite— 
Rodney Hide 
: Almost reasonable. 
CRAIG McNAIR 
: He can make it sound almost reasonable. Speaking as a member of the Finance and Expenditure Committee along with a few of the other members here such as Lockwood Smith and Rodney Hide New Zealand First was concerned and my leader the Rt Hon Winston Peters was concerned that one section of the New Zealand community is receiving an advantage over other groups. We expressed a minority view in the report because of our concern. It is our intention to move an amendment that all sections of the New Zealand community that can take advantage of the proposal relating to basic tax rates of 19.5 percent should be treated in the same way. We cannot support the bill in its current form because of its unfair and race-based system. 
I reiterate that New Zealand First wants to treat all New Zealanders equally and I have prepared some amendments to give effect to this view. I shall quickly read them out. The first one states: “That the words ‘Subpart 1—Maori authorities’ be deleted as shown on page 18 line 9 and be substituted by the following words ‘Subpart 1—Maori authorities and applicants’ ” The second one states: “That on page 21 between lines 6 and 7 the following words be inserted ... ‘Election to become applicant’—‘(1) The applicant whose tax characteristics and tax rates are similar to those of a Maori authority as referred to in this Act shall be entitled to make a similar application to the Commissioner as a Maori authority can under this Act by giving notice to the Commissioner as a Maori authority is entitled to do in terms of paragraph HI 1C of this Act and shall receive the same treatment as a Maori authority is entitled to receive in terms of this Act.’; ‘(2) The words ‘applicant’ or ‘applicants’ shall include all persons legally entitled to be called a legal person in terms of any and all Inland Revenue Department and any other tax legislation including but not exclusively individuals companies incorporated societies charitable trusts sole traders partnerships and any other parties liable to pay income tax.’; ‘(3) The provisions of Subpart 1 as applicable to Maori authorities shall apply to an applicant.’” 
In many ways the amendments answer very well the question that Gordon Copeland the United Future MP asked. The Federation of Maori Authorities welcomes these amendments too and is looking forward to the Government supporting them. 
I reiterate that one of our Maori members Edwin Perry is the chairman of a trust that has 4000 acres. He has 80 beneficiaries and they have said to him that they do not want to be treated any differently from anybody else. We as a party also believe that having different rules based on race will just create and continue the dependency programme that this Government has. We feel this very strongly as a party that believes in one country and one people. Maori soldiers are not treated any differently from any other New Zealanders when they are in the field. They excel exactly the same as other soldiers who have enlisted with them and they get their jobs on merit. This is the same way that our tax system should be. We have a soldier in our own party. In fact we have a couple of them. We have Bill Gudgeon here and he had to work just as hard as anybody else to get exactly what everybody else got no matter what race they were. 
Hon John Tamihere 
: Tell him to get up and take a call. 
CRAIG McNAIR 
: OK. The lion in the media is starting to roar. But we all know that he has proven to be a lamb in Cabinet. 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 The Government will be voting against the amendment for a very simple reason. It is actually incomprehensible and almost certainly just about inapplicable. Probably the only bodies we could be reasonably sure might slip through would be the subsidiary companies of Maori authorities which reverses the decision taken by the Finance and Expenditure Committee. Otherwise if we are talking about tax characteristics we would find it very hard to find anybody who fits into the Maori authority category because of some of those characteristics which are peculiar to Maori authorities and I have already outlined those. People are locked into membership and there are no such other organisations around that one knows of. 
The amendment is meaningless. It would create huge uncertainty within the tax law and we try to avoid uncertainty within the tax laws as far as we can. 
STEPHEN FRANKS (ACT NZ) 
: 
 I appreciate the fact that the Minister in the chair is taking calls and responding to and explaining issues. I would like to have an explanation of the effect of the anti-avoidance provisions the eligibility criteria and the implementation of the committee’s recommendation that companies not benefit from this concessionary or privilege regime. I ask that because it seems to me that a result of the change recommended by the select committee—a sort of attempt to lessen the insult of the race discrimination in this so that companies go back out into a more normal regime—is that companies will be a less preferred form of business entity for Maori-owned businesses. The effect of this will be that Maori may for tax reasons be encouraged to not use normal limited liability companies and instead to trade through trusts. 
If that is the case it may be one of those horrible results of tax planning that means that the Maori authorities as defined that are not companies will be trading in a more risky position with the assets they are stewards of and could lose them because they have decided not to use the limited liability company subsidiary structure which is of course designed to allow risk to be isolated and confined to the particular enterprise. So I would be very pleased if he would take a call. 
I will now go back to the comments made by Gordon Copeland whom I first heard when this was debated several weeks ago espousing the theory that this was not racially discriminatory—that this was not racist—because anyone could qualify for the same treatment as long as that person made sure that he or she did not earn enough. I thought hard. I thought: “He is an enthusiastic member who is doing the bidding of his masters. He has definitely been given very short notice to come in here and speak and he hasn’t a clue what he is talking about or he wouldn’t speak such twaddle.” However I heard it again today. The member has had time to reflect and he still says that this is not race discrimination because the same tax rate—19.5 percent—can somehow apply if people do not earn enough. I really do ask for this Committee to allow him another call to try to get to the bottom of that. 
What we have here is a regime that every superannuation fund and every trust and authority that has a mixture of members who have a low income or a low marginal tax rate and others who may have a higher one would dearly love to get. What it really says is that company tax which is a withholding tax under an imputation regime will be withheld at the rate that is applicable to the lower taxed beneficiaries instead of the higher taxed beneficiaries. Well of course we would all love that. The fact that this is a concession only for Maori when so many other parts of the community would love to have it is of course racism. It is not as Mr Connell says the result of subjugating us to an unsuitable old treaty; it is in fact a result of not applying the treaty. Article 3 of the treaty states that all New Zealanders should be subject to the same rights and privileges as British subjects. Article 3 of the treaty would not allow this provision if it were properly applied. 
I commend Mr Connell and the Minister to Sir Apirana Ngata’s little treatise on the subject of road rates which were the way that so much of New Zealand was opened up and roads were built. They were special rates that rated the property that got the benefit of pushing road through. For decades Maori were not subject to road rates at the same rate as Pakeha. Sir Apirana said very clearly “This is a breach of the Treaty of Waitangi because it is treating us differently.” He went on to say: “It may be something of a quid pro quo for other breaches of the treaty but both are undesirable and as soon as possible we should get out of this position.” If Sir Apirana had been listened to we would have got out of it. We would also have got out of it if this Government had bothered to treat the Convention on the Elimination of All Forms of Racial Discrimination seriously. That convention states that every form of discrimination must have an end date. It states that positive discrimination is OK but that it must be defined for a specific period. This bill breaches that. 
METIRIA TUREI (Green) 
: 
 Perhaps it would be good to start with a quick definition of what racism is for the Committee. I suggest that racism is discrimination against on the basis of race. I suggest to those members who are concerned about what racism is that they might want to gather some more information about it and investigate what constitutes discrimination against. This bill does not discriminate against anyone. This bill attempts to recognise that there is such a thing as cultural difference and that there is such a thing as a treaty-based nation which is the nation in which we live. The treaty was signed by two sovereign States or nations that are entitled to equal recognition. I guess it is difficult for some to understand that and some people need more time to do so but I do commend members who have that difficulty to undertake some treaty education to inform themselves about what it means to live in a unique nation such as ours which is premised on a treaty between two sovereign nations and where the structures values and institutions of both cultures are equally recognised. 
For those Maori who have made contact with the Greens and spoken to me about the bill some will be disappointed with it because it has some gains and some losses. But let me say that the Greens support this bill in recognition of those gains to Maori the marae the whanau the hapu and other Maori organisations. To some small extent it is another step towards an understanding that not everything from 19th century England is appropriate in the 21st century and more important that not everything from 19th century England is appropriate for the indigenous people of this colonised land. It is some small step towards recognising that this is as I say a treaty-based nation. 
We are pleased that the definition of “charitable purpose” has been extended to include those who are related by blood. Traditional Maori structures that prioritise whanau and hapu have had real difficulty in gaining recognition as valid structures in our society. Once defined as “beastly communism” those structures are actually fundamental to Maori cultural economic and political development. The extension of the charitable purposes definition goes some way towards ensuring that Maori authorities and marae are no longer prejudiced by inappropriate culturally biased definitions. 
We are also pleased that the definition of “marae” has been extended in the bill. Serious concerns were raised by the Dunedin Community Law Centre that Maori were discriminated against in the first draft of this bill because marae could have charitable status only if the funds of the marae were to be used for the administration and maintenance of the property—the physical structures. Very real concerns were raised that such restrictions do not apply to similar organisations like churches. We are very happy that the provision has been changed so that a marae will be deemed to have a charitable purpose if it is on a Maori reserve under the Te Ture Whenua Maori Act and if the funds it receives are to be used for a charitable purpose. That change eases the financial burden on marae and recognises the whanau and hapu support and development activities that are central to the purpose of a marae. 
Finally I will comment on the New Zealand First Supplementary Order Paper extending Subpart 1 to other applicants. The Greens do not support that Supplementary Order Paper. Those particular provisions in the bill are there to recognise the specific legal difficulties and constraints that Maori authorities face in dealing with community-owned assets. The extension proposed by New Zealand First should form part of a specific discussion in this community and in Parliament so that the full implications can be canvassed. But also—and I reiterate this because I understand that some people need time to understand it—under the Treaty of Waitangi Maori structures and values are not to be discriminated against and the blanket imposition of rules suggested by New Zealand First National and ACT which are premised on the cultural values of the dominant culture is nothing less than structural discrimination. 
The CHAIRPERSON (H V Ross Robertson) 
: Before I call the next speaker I thank the member for her speech and suggest that she look at Speaker’s ruling 21/8. 
SHANE ARDERN (NZ National—Taranaki - King Country) 
: 
 If there was ever any evidence needed for what I said earlier in the general debate that never before in the history of New Zealand have we had a Government that has had so much yet delivered so little then here is the example. If members need a further example of why we are in such a mess with this legislation today they need look no further than watching an academic with a PhD getting involved in a topic—in this case tax law—that is not relevant to his or her area of expertise. 
I congratulate the Minister on taking a call and trying to explain how he has come to the half-baked conclusion he has come to—that we should have two different tax rates based on race. I acknowledge to the Minister and those present that there are some major issues in terms of multiple ownership in Maori incorporations and of how we should deal with them. I also acknowledge that some of those Maori incorporations are doing well despite all the difficulties they have and despite the Government—particularly this current Government. Today we are debating having two separate tax rates for Maori incorporations. A large chunk of them involve dairy farmers. Some of them are in my electorate where the population comprises 23 percent Maori. We are saying to them that it is fine for them to go out and compete with other dairy farmers of non-Maori descent on a different tax rate. We are saying that is fine and that it is not discrimination. 
I suggest to the Minister to the Maori members present and to those who are heading up some of these Maori incorporations that it is discrimination and this bill will not solve the problem. In fact what is likely to happen is that when we get the nanny State—headed by a socialist Government—interfering these incorporations are likely to fail. That has been the experience of Maori in New Zealand over generations under socialist regimes—led sometimes by National Governments I have to say and sometimes interfered with by National Governments but mostly led by Labour Governments—where Maori have been trapped into poverty steered up the wrong road and told that the nanny State will help them at the end of the day. 
Most of the heads of Maori incorporations have spoken to me and said that they have had enough that they are better than that and that they can foot it on the main stage with the best of them. And they are demonstrating that; there is no doubt that they can. The Hon John Tamihere has said that in recent speeches and I totally agree with him. In my view it is absolutely incomprehensible that United Future member Gordon Copeland could come down to the House and accuse Dr Lockwood Smith of getting it wrong because he has found somebody who is a non-Maori somewhere who will benefit from this tax rate— 
Dr the Hon Lockwood Smith 
: He didn’t say he was a non-Maori. 
SHANE ARDERN 
: He did not say that? 
Brian Connell 
: He said he was Irish. 
SHANE ARDERN 
: He said he was of Irish descent but he could have Maori blood in him as well. He is saying that he has found somebody who does not fit the description in this bill and here we have the beginning of a rort because there is a group of people that somehow or other may be able to fit itself into this without meeting the criteria as most people understand them to be—and Gordon Copeland has actually said that. 
Obviously United Future members are in a hole here. They have vowed to support the bill and they know it will alienate most of those who voted for them. They know that the bill is absolutely opposed to what they campaigned on so they are trying to dig themselves out of a hole. Well the first lesson in politics is that if members are in a hole they should stop digging—and those members are in a hole. There is no way that United Future supporters will support the type of legislation that is in this bill. No amount of explanation and no amount of gymnastics in terms of trying to find a way around disclaiming what was said by my colleague the Hon Dr Lockwood Smith—who I would suggest has a lot more knowledge on this issue than the Minister himself has—will dig United Future members out of that hole. My advice to them is to stop digging. 
Chen Palmer said that $70 million worth of tax differential would go to the fishing industry alone. I suggest to the Minister that this industry is not headed by poor Maori. So who will be the beneficiaries? As the Hon Winston Peters has said many a time poor Maori have not even seen a snapper out of this industry. 
Rodney Hide 
: That was me! 
SHANE ARDERN 
: It might have been too but I know that the Rt Hon Winston Peters has used that line as well—not even a snapper. 
RODNEY HIDE (ACT NZ) 
: 
 I have to get up and sharply disagree with our colleagues across the aisle—what are they “Future United”? Which way round are they—united in the future or in the future they will be united? Those members say that the ACT party supports this bill. In fact the ACT party will be voting hard against this bill. I would like to see United Future members explain to their voters how it is possible for them to be supporting two separate tax systems—one for Maori authorities and one for everyone else. I look forward to that discussion because the ACT party says that is wrong New Zealand First Party says that is wrong and the “New Zealand Great National Party” says that is wrong. We are parties that stand up and say that every New Zealander should be treated the same under the laws of this country no matter their race religion or creed. Members of the United Future party are standing up and saying: “Phooey to that.” They are saying that they will have a separate tax law for Maori through Maori authorities and we say that is wrong. 
Let me commend the Minister for these things. It was wrong that Maori authorities not have imputation credits—and full marks for that; it was wrong that Maori authorities appeared to be getting the advantage of being taxed at 25 percent when everyone else was taxed at 33 percent. But the fact that there were no credits applying meant they were often overtaxed compared with people taxed at 33 percent. The simple decision to make is to have the same tax rules for each and every New Zealander. What is hard about that? Why will Mr Copeland of the United Future party not stand up put his party’s flag up a pole and say that United Future believes that all taxpayers should be the same before the law? One’s ethnicity does not matter. 
Mr Copeland thinks it somehow makes this bill acceptable that he has found an Irishman who can rort it and get on the 19.5 percent rate. He says that it is OK because non-Maori can get in on the rort. We should be closing those rorts down I tell Mr Copeland. We should be saying that the tax rate is the same for everyone. 
Gordon Copeland 
: Everybody in the same tax band—that’s right Rodney! 
RODNEY HIDE 
: Well Mr Copeland sits there and chips in with: “Everyone in the same tax band.” That is absolutely right. That is why the National Party the New Zealand First Party and the ACT party say: “Let’s have imputation credits.” I did not hear the Minister after he had heard the Green Party’s speech in favour of this bill. I thought he was going to stand up and vote it down. He certainly did not think that was what this bill was about—something about cultural imperialism and overcoming that. Again how hard is it to go forward as a nation with our tax laws the same for everyone? 
I asked the authorities that came before the committee whether they thought having a lower tax rate would be good for their business. Do members remember that? Each and every authority said: “Yes. Having a 19.5 percent tax rate when everyone else has to pay 33 percent will be good for our business.” Dr Michael Cullen does not believe that because he says that tax rates do not matter—that we can put up the tax rate and it does not affect business or the economy or that we can drop it; it will not help. But the Maori authorities coming before the select committee said it would help. I would like to hear what Mr Jim Anderton has to say about this bill. 
Brian Connell 
: Who? 
RODNEY HIDE 
: Mr Jim Anderton. He is the economic wizard of this Labour Government. He said that if we have a tax cut it is an economic intervention. 
Dail Jones 
: It’s a subsidy. 
RODNEY HIDE 
: Well here we have a subsidy but only to some. I look across at my colleague the Hon John Tamihere and ask him how our children are to grow up together in New Zealand as New Zealanders in one country if we have two sets of laws: two sets of policies and two sets of tax systems on the basis of whether the State declares one to be Maori and another to be non-Maori? I should declare a conflict of interest here because both the Minister of Maori Affairs and Tariana Turia said that I am Ngai Tahu. 
PANSY WONG (NZ National) 
: 
 It is with regret that I take part in the debate on Part 2 which creates two systems of taxation. The part has been very well argued by the ACT party and my colleague Dr the Hon Lockwood Smith and Mr Shane Ardern. When one thinks about it the Minister’s objective sounds quite reasonable. He says that eventually most taxpayers will be on a lower tax rate so for administrative purposes why not lower the tax rate for Maori organisations and therefore save those people from having to claim a refund at the end of the process? However the question remains as to why other taxpayers who are also on a lower income level cannot receive the same benefit. That defies logic. There is no logic to that. Other taxpayers in New Zealand on a lower income level would not be able to claim the same benefit. They would have to go to the trouble of filing a tax return and claiming a tax refund etc. That defies logic and is not fair. 
The second reason is even more discouraging. The Minister and the Labour Government is resigned to the fact that the majority of benefactors of Maori organisations will remain in a low income tax bracket. Therefore instead of sending a positive signal to Maori taxpayers to aspire to be high-income earners the Government is conceding that they will remain low-income earners. Recently a report conducted by the independent National Bureau of Economic Research was commissioned by one Government department. It reached a very positive conclusion on the economic performance of Maori organisations. That report stated that those organisations utilise their assets very well. I have some news for the Labour Government which has not read that independently researched report and has continued to put down Maori taxpayers: that economic report states that a lot of Maori organisations are doing very well. So Maori are aspiring to become high-income earners. 
It makes sense that the Government has two choices. One is to bring down the tax rate for all organisations and all taxpayers which would send a positive signal to everybody and show that the Labour Government for a change wants everybody to do well and wants New Zealand to return to the top half of the OECD. So Labour should be prepared to reduce income tax levels to encourage all taxpayers to aspire to become high-income earners. The alternative choice is not to complicate the tax system and the work of the Inland Revenue Department any further by creating two separate systems. Because of the complications involved in that process we end up having to debate once again a bill that runs into more than 100 pages. No doubt during the process a lot of people will be arguing about the definition of a Maori organisation and we will get into all sorts of technical interpretations. Once again it is good news particularly for tax lawyers but what has this particular tax legislation achieved? 
JILL PETTIS (Junior Whip—NZ Labour) 
: 
 I move  
That the question be now put 
. 
The CHAIRPERSON (H V Ross Robertson) 
: No not just yet. 
Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) 
: 
 It was kind of sad a few minutes ago to listen to Mr Gordon Copeland trying to justify United Future’s support for something it knows is morally wrong. United Future members know that it is wrong to discriminate on the basis of race and we heard him trying to justify that he had found some priest somewhere—a Monsignor Cullen—who he claims is of Irish descent. He did not say that he was of Maori descent as well. 
Gordon Copeland 
: I raise a point of order Mr Chairperson. I believe that  
Hansard 
 will show because there was so much interjection at the time that I said “but in any event he certainly is not a Maori”. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: No the member will sit down. That is a debatable point. 
Dr the Hon LOCKWOOD SMITH 
: I remind Mr Copeland that it is not unusual for people to claim different ancestry for different occasions. I well remember Mr Peters often claims Scottish descent when that suits him and he is of Maori descent when that suits better. 
However I want to address a couple of serious issues because there are three areas where Part 1 I believe is discriminatory. I realise that the bill is not in the name of the Minister in the chair but I really would appreciate it if officials could assist him with some answers to these quite serious questions. 
The first question concerns this matter. On 3 October the Law Society appeared before the Finance and Expenditure Committee and pointed out to us that the way the imputation system will work for this special taxation system for Maori authorities is different from the way the imputation system works for normal company taxation. The Law Society indicated to us that the way it had read the bill was that it was possible for taxpayers to get an imputation credit greater than the tax they have paid and to get a refund for tax not paid. The society certainly indicated that the way this system works is different from the normal imputation system. It would be helpful if the Minister could explain to the House whether the way the imputation system works in Part 2 is the same way the imputation system works for the normal imputation system. On the one hand we have a concern that there is discrimination on the basis of the 19.5 percent tax rate. OK lots of colleagues have debated that issue. I am not asking the Minister specifically about that; I am asking him specifically about the way the credit system will work for tax paid by a Maori authority in allocating that credit to the beneficiaries of the authority and whether there is a discriminatory procedure in the mechanism of the system that will treat beneficiaries differently from the recipients of imputation credits under our normal imputation law. If there is that is a second discriminatory process in this legislation—second to the fact that there is a discriminatory tax rate in the first place. I am not asking the Minister to comment because we have had lots of debate on that but I would appreciate his advice if his officials could assist him on whether the mechanism is different and more favourable in that it would enable refunds to be paid that would not be payable under the normal imputation system. 
My next question to the Minister is this: is clause 66 in Part II also covering that extension to charitable purposes? That is also discriminatory because for all other people in this country where beneficiaries have blood ties to the charity they do not qualify under the definition of a charitable purpose. This legislation will allow exclusion on the basis of blood and blood ties for Maori people alone and for no one else. Pacific Island people who may have blood ties to an Irish charity do not get that benefit. It is specifically for Maori people. OK that is another discrimination made on the basis of race but clearly the Government has decided to make it. My question to the Minister specifically concerns this issue. When the Inland Revenue Department was in front of the Finance and Expenditure Committee on 30 October it was asked how many people would benefit from that change and what would be the fiscal cost of removing that exclusion on the basis of blood ties and extending charitable purposes to marae. 
The Inland Revenue Department could not tell the select committee. I tell the Minister standing in for the Minister responsible for the bill I think it is fair enough that in this Committee stage this Parliament should know the fiscal cost of this provision because the Inland Revenue Department—and I have notes here from 30 October—could not tell the select committee what the cost was how many people would be involved or the cost of this provision. So those are two specific questions for the Minister and I think they are reasonable questions. The first question was: is there a different arrangement in the way the imputation system will work for this special Maori taxation system? The Law Society certainly believed there was. My second question is simply: what is the fiscal cost? Those are reasonable questions deserving an answer. 
Hon JOHN TAMIHERE (Minister of Youth Affairs) 
: 
 I move  
That the question be now put. 
A party vote was called for on the question  
That the question be now put 
. 
Ayes 69 
Labour 52; Green Party 9; United Future 8. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
The question was put that the following amendment in the name of Craig McNair to clause 24(1) be agreed to: 
to omit the words “Subpart 1—Maori authorities” and substitute the words “Subpart 1—Maori authorities and applicants”. 
A party vote was called for on the question  
That the amendment be agreed to 
. 
Ayes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Noes 68 
Labour 52; Green Party 8; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Craig McNair to clause 24(1) be agreed to: 
To insert after new section HI 1 the following new section: 
HI 1AElection to become applicant 
(1)The applicant whose tax characteristics and tax rates are similar to those of a Maori authority as referred to in this Act shall be entitled to make a similar application to the Commissioner as a Maori authority can under this Act by giving notice to the Commissioner as a Maori authority is entitled to do in terms of section HI 1C of this Act and shall receive the same treatment as a Maori authority is entitled to receive in terms of this Act. 
(2)The words “applicant or applicants” shall include all persons legally entitled to be called a legal person in terms of any and all Inland Revenue Department and any other tax legislation including (but not exclusively) individuals companies incorporated societies charitable trusts sole traders partnerships and any other parties liable to pay income tax. 
(3)The provisions of Subpart 1 as applicable to Maori authorities shall apply to an applicant. 
A party vote was called for on the question  
That the amendment be agreed to 
. 
Ayes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Noes 68 
Labour 52; Green Party 8; United Future 8. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 59 in the name of the Hon Dr Michael Cullen to Part 2 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 68 
Labour 52; Green Party 8; United Future 8. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 2 as amended be agreed to. 
Ayes 68 
Labour 52; Green Party 8; United Future 8. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Part 2 as amended agreed to. 
Part 3Amendments to Tax Administration Act 1994 
Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) 
: 
 Part 3 covers amendments to the Tax Administration Act. Clauses 86 to 89 cover the issue of distribution statements of Maori authorities and the credit account returns of Maori authorities. I ask the Minister in the chair again whether there are differences in the way the imputation system or the credit system will work for Maori authorities. Are there differences from the standard imputation system? We were led to believe at the Finance and Expenditure Committee that there were differences that were discriminatory because the way the system will work here confers favouritism that is not available through the standard imputation system to the people of races other than Maori. I think it is fair enough and there may be good reason there is a different imputation system but we need to know. If this Parliament is passing legislation it is fair enough to know what it is doing. I think it is reasonable that the Minister should explain. Is the imputation arrangement here the same apart from the fact that it is a discriminatory tax rate or does the credit system or the imputation system differ in the refunds available for tax not actually paid? That is my first issue. 
The next issue is this. Clause 74 in particular relates to the power to remove documents from businesses. The Law Society was very concerned that the power provided in this legislation—the power of search and seizure—on the face of it was in conflict with the New Zealand Bill of Rights Act. This was not some minor submission to the select committee. The New Zealand Law Society made this submission. Again I would like the Minister to advise us what further advice the Government has taken on whether clause 74 and this issue of the power of search and seizure is in conflict with the New Zealand Bill of Rights Act. That is my second question to the Minister. 
Another very important issue in this part of the bill is I think under clause 100. Up until now if a person has had a dispute with the Inland Revenue Department there has been a provision that the department collects 50 percent of the money from that person and that person does not have to pay the other 50 percent until the dispute is sorted out. The amendments in this legislation will enable the Inland Revenue Department to claim 100 percent of the money in dispute. Sure the select committee managed to get some easing of this provision so that the department is meant to claim this 100 percent only if it has concerns that it may not receive the money in the event it wins the case. But the problem is this: if the department gets 100 percent of the money and it is wrong the use-of-money interest rate it pays is only 4.83 percent—way below commercial rates. 
There is an issue there that should be addressed by the Government. I would like the Minister to respond to this. If he is allowing the Inland Revenue Department to claim 100 percent of the tax in dispute with this legislation why is it not that a more reasonable use of money interest would be paid if in fact the department were proved to be wrong when the dispute is resolved? That is my third question to the Minister. 
The fourth question concerns clause 114 which from memory provides for promoter penalties where promoters promote schemes that are clearly inconsistent with our tax legislation. National has no great problem with penalties in that clause to start avoiding what are ridiculously avoiding schemes. But the problem is—and I want the Minister to explain what would happen in this case—what happens when there is a tax adviser who has promoted a scheme that he or she believes is perfectly reasonable? The Inland Revenue Department is not sure about it and gets into dispute with the taxpayer. The taxpayer gets all nervous about being in dispute with the department and settles with the department because lots of taxpayers are scared of the might of the Inland Revenue Department. That means a precedent is set that suggests that the scheme is outside the law. 
Now the tax adviser who promoted the scheme is caught without having had any say in its defence—in the first place because a person involved in the scheme may have agreed to a settlement with the department. I would like the Minister to explain to us how in this legislation the situation will be overcome in which we have a perfectly honest and reasonable tax adviser promoting what he or she believes is a reasonable scheme but being caught because a taxpayer agrees to a settlement. 
SHANE ARDERN (NZ National—Taranaki - King Country) 
: 
 Following on from my colleague in this part— 
Rodney Hide 
: A good speech actually. 
SHANE ARDERN 
: It was a very good speech—very informative. It was most helpful. My colleague touched on a few very good points. I would ask the Minister in the chair to take a call to answer some of the questions that the member raised. Why is it that legislation concerning the Inland Revenue Department can require somebody to pay 100 percent of the tax the department deems to be owing before it has been demonstrated that it is owing? Why is that the case? Why is it that that person will then receive a much lower interest rate than he or she will probably be borrowing to pay the tax? The people who are likely to find themselves in that situation are the entrepreneurs of this country—the sorts of people that the Prime Minister of this “Labour propped-up Government by a few on the side” has said— 
Brian Connell 
: United! 
SHANE ARDERN 
: United Future members who say one thing and vote another way. That Government has said that it will support entrepreneurs. It will support small-business people. It will support the wealth creators of the economy. Here we have a situation where Part 3 of this tax amendment bill being debated in Parliament today does exactly the opposite to what the Government has been talking about doing for the last 3½ to 4 years. In fact it could be enough as my colleague has pointed out for people like tax advisers to become so shy of what could happen—its ramifications to them and their businesses; they could be in breach of the law—that they will not give that advice. 
Dr the Hon Lockwood Smith 
: The penalty is 100 percent. 
SHANE ARDERN 
: The penalties are so tough. Most people know that they do not want to get offside with the Inland Revenue Department and I know in my own farming business and in small businesses around me the amount of effort that people go to to make sure they comply with the department’s requirements. Sometimes it is to an extreme point where they worry themselves and they worry their families. There are many documented cases of where that has happened. Many members of this Parliament have raised those issues and here today despite all the rhetoric about those issues we have legislation that is likely to make them worse. That is absolutely contrary to what the Government has told everybody it will do. It is another layer of cost another compliance that will be hard to live up to and another potential situation for good honest citizens who do not understand the detail of tax law to get themselves slightly out of line with the Inland Revenue Department and to have thrust on them that draconian penalty of 100 percent of what the department deems them to owe. There is no natural justice in that. I suggest that the Minister take a call and explain to us why on this basis the legislation should proceed through this Parliament. 
I also want to touch on the whole issue—once again it is referred to in Part 3; I have just been flicking through and having a look—of two separate tax rates. It is the issue of a different tax rate based on race. I want the Minister to explain that to this Committee once again because the previous Minister in the chair the Minister of Revenue got up and made an attempt to explain it. I congratulate him on that but I certainly was not convinced and I know that the Maori authorities were not convinced either. This Minister in the chair may have a different approach that is more convincing. I suspect he will have a few Maori authorities in his own electorate and I am sure he will have a bit of knowledge of the issue. Maybe he can take some advice from his officials. I would like this Minister to take a call when my time is complete to explain to us why we will have this draconian legislation pass through Parliament under this Labour-led Government and why it feels we should have our tax laws based on racial grounds rather than any other criteria that would be sensible to apply. 
The Minister may not consider taking a call right now. He might consider waiting until the Minister of Revenue comes back. That will be fine but one Minister somewhere in this Government needs to explain to the rest of the New Zealanders who are listening today and who are wondering about this legislation why we are proceeding with it given the overwhelming advice of a range of people in the select committee my colleague was part of who suggested that this was not the right approach. Why has the Government finally decided that it needs to proceed with Part 3 of this bill today when there is an overwhelming majority of people who have said it is not right? 
RODNEY HIDE (ACT NZ) 
: 
 We see in the Chamber today the contempt with which this Government treats Parliament. We do not see the Minister rising up to answer questions. I can understand that because this Minister in the chair the Hon Mark Burton— 
Jill Pettis 
: There are thousands here. 
RODNEY HIDE 
: —is incapable of understanding this bill or answering questions on it. I am pleased that Jill Pettis called out about the lack of Government MPs in the Chamber because there are only three MPs from the Government present. One of them is the Minister sitting in the chair not paying attention and the other two are here to move that the question be now put. Not one of them will stand up and speak to the bill or answer questions. I am afraid the Greens have become doormats and I hope the United Future members are not doormats because I have a very serious issue and want to take members to page— 
Jill Pettis 
: How many ACT members here—one? 
RODNEY HIDE 
: Ah but what a member! 
The CHAIRPERSON (Ann Hartley) 
: I remind members about the convention of not referring to the absence of members. Thank you. 
RODNEY HIDE 
: I was referring to the fact that there were three Government MPs present. So it is not that the others are absent; it is that there are three Government MPs here. I want to direct the attention of members to clause 103 which is a disgrace. We had a committee inquiry to hear how the Inland Revenue Department could get a bit out of hand. It was a good committee chaired by Peter Dunne. Members were stunned to learn that one could get hit with a 50 percent prepayment of an amount in dispute. We heard of cases demonstrated as true where the Inland Revenue Department without any reason declared that a taxpayer owed $1 million. The poor old taxpayer had to front up and pay half. We thought that was outrageous. It was never tested in court but just made up. So we got rid of that provision in this bill. The payment goes to zero—unless the commissioner says otherwise. That means the commissioner or any one of his or her officers. They could just say: “Oh look we don’t actually like you so we’ll charge you 100 percent plus interest.” That is arbitrary power. 
Every submission we had was against that arbitrary power but members will be pleased to know I have drafted an amendment—[ 
Interruption 
] Thank you! I know that United Future will come in and support it and so will Mr Dail Jones—to delete clause 103(1C) and clause 103(1D). With good Minister Dr Cullen’s assistance through the experts in the Inland Revenue Department we have it in form so that it will absolutely work and do the biz-o. A commissioner or departmental officer will not just decide that Mr Dail Jones is to be “done” and make up a million-dollar tax bill against him without proving it and without having any reason for thinking it. Poor Dail Jones would be bankrupted before he could ever get to court. That is wrong and that power should never be put across. 
I invite members to reflect on this point and I am sure that Mr Dail Jones as the only lawyer present will back me up. There are two lawyers—one from the Green Party. She will back me up. If they think that there is a problem they can go straight to the High Court—and help me with my pronunciation—[ 
Interruption 
] No John Tamihere was a lawyer and that is a long story; he was a lawyer but he had to give up his licence. They can go to the High Court and get a Mareva injunction which ensures that assets are not distributed. So the person goes to a second authority—a High Court—presents the case in front of a judge and can hold the assets. That is the way every other litigant or disputant has to do it. Why? Because that is a fair process. How can we have the Inland Revenue Department finding a taxpayer a bit mettlesome and saying: “You owe $1 million and you have got to pay it now because we think you might run away. If you don’t think you do take us to court. Oops! Sorry. You’re bankrupted.” ? 
Dr Lockwood Smith knows this. We heard this from taxpayers who were in that situation. This is the most draconian move against taxpayers we have seen in my time in Parliament. We are giving the commissioner and all who work for him arbitrary power to declare an amount of tax never to have it tested and to demand that it be paid. It is a backward step of unimagined proportions. I am afraid that if this goes through taxpayers will have to be very very afraid and it is unnecessary. 
I myself do not take any heart from the Inland Revenue Department saying: “Oh we’ll use it only in a limited number of cases.” The people who decide whether it is appropriate are Inland Revenue Department people. I look forward to members supporting my amendment because I know that under this Government I will not get to speak on Part 3 ever again. The Government will move to shut it down. 
CRAIG McNAIR (NZ First) 
: 
 I wish to speak to Part 3. 
Rodney Hide 
: Will the member support my amendment? 
CRAIG McNAIR 
: New Zealand First will support the amendment to clause 103. First and foremost I want to talk about the imputation system in clauses 86 to 89. This revolves all around this separate taxation system. I must admit that Rodney Hide was very right. I am very proud of Rodney Hide. He was very selfless. Being a member of the— 
Rodney Hide 
: The Ngai Tahu. 
CRAIG McNAIR 
: I was going to say Te Mangai Paho but I do not think it is that. He is a member of the Ngai Tahu tribe. He is laying it down— 
Rodney Hide 
: I’ve got no Irish in me though. 
CRAIG McNAIR 
: He has no Irish in him! However he said we should all be treated as one people. Even when we are talking specifically about clauses 86 to 89 in relation to the imputation system it still revolves all around this particular issue of a separate tax system and so on. The Hon Dr Lockwood Smith made some very interesting points. It would be good for the Minister in the chair at this point to talk about the reason that this imputation system is in place with this bill. If he is not totally up with the play on it since the bill is not under his name that is not a problem. I will not make fun of him for that but maybe he could get that information for us or he could speak to us. That would be much appreciated by all members on this side of the Chamber. Pansy Wong and I are in agreement. I guess we will enjoy that moment because it is a bit of a worry. We might not see that moment ever again. 
I want to ask a question in relation to this part. Is this bill fair? Are clauses 86 to 89 fair? Rodney Hide asked a good question. Is it a fair process? 
Opposition Members 
: No! 
CRAIG McNAIR 
: Members all around the Chamber agree with me. They do not feel that it is a fair process. Is this bill just? 
Rodney Hide 
: No. 
CRAIG McNAIR 
: It is not just. I do not know what the lion is saying but he is laying down like a lamb. He is roaring again. As we look through this part the question we need to ask is whether it is draconian legislation. 
Rodney Hide 
: Yes. 
CRAIG McNAIR 
: The answer is yes. It has changed from no to yes. We also have to ask whether it is arbitrary. Yes it is. We have to ask ourselves whether this is a step forward in the right direction for the people of New Zealand. 
Rodney Hide 
: No. 
CRAIG McNAIR 
: Even the member of Ngai Tahu says “No”. It is not fair for all of us when we talk about clauses 86 to 89. 
BRIAN CONNELL (NZ National—Rakaia) 
: 
 I want to focus on clauses 86 to 89 as well. Essentially this goes to the heart of this debate. I am talking about the tax rate and imputation credits. I want to take a moment to read from the commentary. It is important that people understand exactly what this issue is: “Currently income retained by Maori organisations is taxed at a rate of 25 percent”—there is something in that for a start—“refundable if the income is distributed within 4 years.” Up to that point there is not a problem. “If the income is retained for 4 years before distribution to members the distribution is subject to resident withholding tax at a rate of 33 percent.” This is where we run into a problem. No credit is given for the 25 percent tax paid by Maori organisations. 
That is clearly wrong. I do not think members on this side of the House have a problem with that but one does not fix one problem by creating another. The tax imputation issue should be dealt with. One does not have to go down the track of introducing a race-based tax just to fix that issue. 
The other issue I would like to draw to the attention of the Committee is that the way this legislation is drafted is anti-competitive. By that I mean that it gives a party a competitive advantage. If we really want to grow our economy and if we really understand how to grow our economy we will understand that we need to attract foreign capital we need to give those people a fair go and we need to give our business people a fair go. We will not do that if we put in place legislation that is anti-competitive. 
Let me remind members why I say that it is anti-competitive. The select committee was told that this would provide a $70 million windfall for the Maori authorities in the fishing industry alone. That is not a fair go. It will lead to a racket. Gordon Copeland has already started to establish that there will be rackets. He has gone out and found someone who feels that he or she would like to take advantage of this. But more than that we have authorities like PricewaterhouseCoopers that told the select committee that it would not be difficult for Maori businesses with the help of PricewaterhouseCoopers to access the very favourable 19.5 percent tax rate. I again ask the members of this House whether that is a fair go. What does it suggest to members? It suggests to me that we will see widespread abuse. What we are doing is creating structures with the incentive for abuse—and human nature being what it is will take advantage of that. 
I will reflect on United Future’s position for a moment. I find it very ironic that a party with the word “united” in its title can be supporting legislation that is so divisive. What they are saying to the people who supported them—[ 
Interruption 
] Someone is yelling out over there. I think it is the senior Government whip again. I did not think that genetically modified organisms had been released yet! United Future members are telling the people who supported them on the basis that United Future wants a united future for this great country of ours that they are supporting a race-based tax. They will put a minority group of people at an advantage over others. 
The irony of this of course is that the Minister is right to reduce taxation if he wants to grow the economy. The problem is that the Government should not do so for just one section of the community. It should do so for everybody. It is a basic construct if I could use that word that if we want to share wealth then we have to create it and by lowering tax that is exactly what we will do. 
PANSY WONG (NZ National) 
: 
 I really think the Minister should take a call because my colleagues starting with the Hon Lockwood Smith have raised four very substantial questions during the debate on this part. We have not heard one intelligent reply from the Labour side or from the Minister. National will certainly support the amendment to the draconian measures imposed in clause 103. 
I am going to raise another question and I really think it would be helpful if the Minister could pay attention start to read Part 3 and start to consult the officials. I have been reading Part 3 in which there are quite a few definitions. Part 3 involves the issue of penalties. Clause 72 “Interpretation” now has a subclause (2B). We now have the term “acceptable tax position”. The term “acceptable tax position” apparently means a tax position that is not an unacceptable tax position. This is very interesting. The public will be interested to know that an “acceptable tax position” means a tax position that is not an unacceptable tax position! 
So at that point I thought I had better do some research. I went back to section 141B “Unacceptable interpretation’’ of the Act. Apparently in that section headed “Unacceptable interpretation” an unacceptable tax position occurs when it: “(a) Is an interpretation or an interpretation of an application of a tax law; and (b) Viewed objectively that interpretation or application fails to meet the standard of being about as likely as not to be correct.” 
I think that the Minister should really take a call. The wording of that section is very unclear and many taxpayers may start to get really worried. First of all I would like the Minister to explain whose objective will be taken into account when they interpret whether that application fails to meet the standard of being about as likely as not to be correct. What is the test to determine whether the interpretation is “as likely as not to be correct.”? Is it at the sole discretion of the commissioner? Is there a process of application for review or is it done through some very long-established court cases? 
I say to the Minister that it is important for taxpayers to understand when a penalty is imposed on them when they become caught in a position that is actually not an acceptable tax position—no wonder people need lawyers to help when they are filing simple tax returns! I raise that issue because that particular interpretation alone is enough to scare taxpayers because how can they be sure that they are in an acceptable tax position? 
I also want to once again comment on a very important point—it was raised by both the Hon Lockwood Smith and Rodney Hide of ACT—and that is this: why is it once again not a level playing field? The Inland Revenue Department is a very significant Government department. It is well resourced. Why should it not be held to the same standards in terms of getting its assessments correct and in terms of the detail it needs to go into before the commissioner can actually say how likely it is for one to assume that the taxpayer is part of a scheme that is liable to be caught under the Act? It certainly is not fair for the commissioner to arbitrarily say “50 percent” or whatever the outstanding liability should have been. 
Hon JOHN TAMIHERE (Minister of Youth Affairs) 
: 
 I rise to talk about issues regarding clause 103 that were raised by Rodney Philip Hide of the ACT party. Clause 103 should be renamed “Kiwi Protection Clause Against Rodney Hide and the ACT Rort Party”. The reason the clause should be so renamed is that when payments are disputed—and in large part they are disputed by larger corporates—[ 
Interruption 
] There is Rodney Hide protecting his mates. He worked for Tappenden Holdings with his friends Gibbs and Farmer. I have to tell members that these clauses are vitally important to protect the revenue of the nation against white–collar gold-pen pushing people who owe the State $4 billion. 
Rodney Hide 
: I raise a point of order Madam Chairperson. Does the Chair seriously think it is in order for John Tamihere to speak like that—because he is a guy who has actually been done for fraud in the courts of this country. 
Hon JOHN TAMIHERE 
: Madam Chairperson— 
The CHAIRPERSON (Ann Hartley) 
: Is the member wishing to speak to the point of order? 
Hon JOHN TAMIHERE 
: Well it was not a point of order so I wanted to get your steer so that I can get on with my speech. He is trying to break it up. 
The CHAIRPERSON (Ann Hartley) 
: Members need to stick to the bill and be orderly otherwise it will lead to disorder. 
Hon JOHN TAMIHERE 
: I refer to the requirement for payment of disputed tax and the requirement for a discretion on the part of the commissioner. We must protect the revenue. There is $4 billion outstanding and it is owed particularly by corporates who dance and use smart alec accountants and lawyers to defeat the purposes. The wage earners and salary earners in this country are the honest Kiwis. They make up 89 percent of the payers and they pay on the knocker every time. We have to protect them against the types of people from the rort party. That is what clause 103 is all about. Clause 103 protects the revenue and it protects the revenue from the types of people Rodney Hide is in Parliament to look after. 
DAIL JONES (NZ First) 
: 
 I have never heard anything as despicable as the speech I have just heard from John Tamihere. He is supposed to have had some legal training and for him to say that that type of clause is there for that type of purpose is utterly ridiculous. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
DAIL JONES 
: When the Committee rose various issues were being discussed. We had just had to put up with a speech from the Labour Minister the Hon John Tamihere which must have been one of the low points of the House since I have come back to it. With speeches like that one wonders how he can remain a Minister under this Labour Government. From his speeches about Labour Party policy and from the manner in which he conducts himself in the House it seems he has dissociated himself from Labour Party policy which is totally outside the Westminster system but that is obviously the standard the Prime Minister wishes to set. That is all I will say about that. 
In so far as the bill is concerned I refer to clause 103 “Obligation to pay tax during challenge”. As I see the bill now it seems to require that the total amount has to be paid. There was a time when one paid only 50 percent—and although I say “only 50 percent” it was still 50 percent. I believe the reason it has been increased to 100 percent is that it was possible under the old system to get some money back from the Inland Revenue Department. If one had paid the Inland Revenue Department 100 percent and was under a challenge one could then say to the Inland Revenue Department: “Look I’ve paid you 50 percent more than I had to and now I want 50 percent back.” 
That situation applied to a client of mine when I was involved with the taxation review. Do members think I could get that 50 percent back from the Inland Revenue Department? Under that system the department insisted that people pay 50 percent but when people overpaid the department and they tried to get 50 percent back it was virtually impossible. Fortunately in that case not only did I win but I was also given interest on the money the Inland Revenue Department had failed to pay back to my client. That is a dreadfully uneven playing field. 
As the honourable Rodney Hide mentioned people can go broke in the course of that process. As the member also suggested if there were a malevolent Government in place that could somehow influence the Inland Revenue Department this clause could be grossly manipulated to put people into bankruptcy and companies into liquidation. I am pleased to say I have never ever known that to happen but times can always change. 
Even in the fairest of economies and in the fairest of times someone in the Inland Revenue Department can make a mistake. We have known of cases where that has happened. Was there not a Mr John Henderson involved once? 
Rodney Hide 
: David. 
DAIL JONES 
: David Henderson—he got into all sorts of financial difficulties as I recall and that would have been under the 50 percent system. Members can imagine what would have happened to him under the 100 percent system. 
This is an iniquitous clause. It is dreadful legislation. It shows that the Government and the Inland Revenue Department have no faith in their view of things. Most people have the opportunity to go to court and to fight out a case and if they lose they pay. One of the things Roger Douglas did in the 1984-90 era was to increase the amount of penalties so that people thought twice about getting involved in that type of situation. If they did try to take on the Inland Revenue Department and lost they paid through the nose with interest penalty interest and suchlike. That made it very very dangerous to try to take the Inland Revenue Department on. I will be supporting Rodney Hide’s amendment for that reason. 
The other area I will discuss is with regard to Maori authorities which are mentioned in this part of the bill as well. 
JOHN CARTER (NZ National—Northland) 
: 
 I am taking a call on Part 3 because I have been listening to this debate and I have to say that this bill the whole bill actually is causing me more and more concern. This bill I think is quite a serious bill because of what it is doing. Part 3 is an example of that and we have just heard a very good speech from Dail Jones about the concerns we have. To be fair I must say that the Minister of Finance was taking calls in this debate and helping to explain to the Committee what is going on— 
Hon Paul Swain 
: Not according to my notes. 
JOHN CARTER 
: Michael Cullen did not take a call? He has taken a call but not on this part. In fact he took two or three calls and I thought he was very helpful. He tried to explain the bill but at the end of the day he was not able to. Nevertheless his contribution was useful and it was good to see the Minister in the chair take a call. I really would like the Minister in the chair now Paul Swain to stand up and advise the Committee why he thinks this legislation should be passed. Also it would be great if the Minister of Maori Affairs would take a call on this part and explain to the Committee why he believes it is an important part of what the Government is doing for Maori. 
Rodney Hide 
: He needs money for the booze-ups. 
JOHN CARTER 
: Well he could explain why money has been spent in the wrong places. But what concerns me—and I know that it probably concerns the Minister of Maori Affairs; or I suspect it does—is the injustice of what this bill will do for all non-Maori in this country. 
Hon Parekura Horomia 
: Don’t forget your mokopuna. 
JOHN CARTER 
: She would not expect to have special attention just because she is of Maori descent. She is a person who will stand on her own feet in this country thank you very much. She does not need to have a Government saying to her: “Sorry you aren’t capable of looking after yourself.” She is a young lass who will get on her feet and make something of her life by herself for herself. She does not need somebody like the Minister of Maori Affairs coming along and saying: “Sorry. You’re not capable.” which is what this bill is doing. It is saying: “Sorry. You seem to be disadvantaged and incapable of looking after yourself.” I am pleased to say to my colleague across the way that my mokopuna will not be in that situation—no one in this country needs to be—but the Government with this legislation is encouraging that to happen. 
I know that that Minister across the way does not think like that actually. I am surprised that he is sitting here listening to this debate and not contributing. More important I am surprised he is allowing his Government to put this sort of legislation through. In the days when he was an ordinary person prior to becoming a member of Parliament he never thought like that at all. That member over there worked at trying to get people on their own feet and using their own values. That is what he used to do. Now he is not even defending Part 3. 
As I said we have just heard a very good speech from the honourable Dail Jones who told us about the difficulties that this legislation will cause people and about the extra costs they are likely to incur. I am talking entirely about the extra costs that are likely to be imposed on people if there is a dispute about any area of Part 3 with regard to the payment of tax. I say to the Minister in the chair and to the Minister of Maori Affairs particularly that they need to be concerned about that. The Minister of Maori Affairs needs to read Part 3 if he has not yet had the opportunity to do so—and he may not have—and ask why an extra impost will be put on his people. He needs to ask why the Government is imposing extra compliance costs when this legislation is supposedly an advantage to people of Maori descent. I say to the Minister across the way that I do not know that that is so at all. He needs to think seriously about how he will vote on this legislation because when he is on the marae next time somebody who knows a bit about taxation law will stand up and start asking him some questions—and what is going to happen? 
GORDON COPELAND (United Future) 
: 
 I will speak on clause 103. If members look at the clause they will see that it has the word “New” written there then in brackets the word “unanimous”. For the benefit of those listening I point out that that simply means the clause was unanimously approved by the Finance and Expenditure Committee. The names of the members of the Finance and Expenditure Committee are also set out in the bill and they include the honourable member Rodney Hide. At the select committee Rodney Hide agreed with everyone else that clause 103 was a good clause to include in this bill. He heard the explanation as we did from the officials. They said that this clause is intended to address situations where people blatantly set out on a course of tax evasion then when the Inland Revenue Department catches up with them decide to transfer their assets off shore liquidate their New Zealand position and dodge the tax. This clause is aimed at addressing those specific situations where there is significant risk—and that is what the wording is; “a significant risk”—to the revenue. People will have to front up with that tax and pay it into an escrow kind of account whilst the matter is determined in the courts. 
However I go back to my comments about the member Rodney Hide. Having agreed to the clause in the select committee he now comes along to the Committee of the whole House tonight and proposes his amendment. I have not actually seen the amendment. He has not bothered to show me a copy; nor has he bothered to read it to the Committee. We have no idea what is in it. But I ask myself why he has done that. Is it because the member does not know his own mind or could it possibly have something to do with the fact that what happens in the select committee with the officials is kind of a private matter whereas what is happening here in the Chamber tonight is broadcast on the radio? 
The CHAIRPERSON (H V Ross Robertson) 
: I am sorry to interrupt the honourable member but I am having trouble hearing him because of the noise that is taking place to my right. I remind honourable members that if they want to have long conversations they can do so in the lobbies. 
GORDON COPELAND 
: Concerning the situation about the so-called race-based rate for Maori authorities I would like to make a couple of points. First once again if we look through the list of members on the Finance and Expenditure Committee we will see that it includes Rodney Hide from the ACT party. He did not lodge any kind of minority report about his disagreement with that particular clause at the select committee yet he comes to the Chamber tonight and brings out the race card. By contrast Craig McNair and Lockwood Smith from the other two Opposition parties at least had consistency in their position—a position by the way that I completely and utterly disagree with. But at least they were consistent in saying at the select committee and here in the Chamber that they oppose those particular provisions in Part 3. 
I was delighted to hear Brian Connell admit that the present tax rules that apply to Maori authorities here and now tonight are totally unjust. They amount to a double taxation on those authorities and I am glad that he picked up on that and was prepared to admit it. Tonight we are removing a complete injustice a double taxation which applies only to Maori authorities. That is the point—it applies only to Maori authorities. It does not apply to companies. It does not apply to other organisations. Tonight we are putting right a fundamental injustice towards Maori organisations. That in my opinion is something that this Chamber ought to freely acknowledge. As I said before I totally and utterly disagree with the position taken by New Zealand First and National. On the one hand Brian Connell has started to admit that this is a serious injustice and on the other hand he argued that this injustice should continue. I believe that that is a totally unacceptable situation. 
The CHAIRPERSON (H V Ross Robertson) 
: Would members please resume their seats. I am sorry to interrupt the honourable member but there is too much noise. One or two yellow cards will be going out. Will the member please continue his speech. 
GORDON COPELAND 
: I do not think there is really much more one need add. This is a clear case of Parliament being asked to rectify an existing serious injustice against Maori organisations. I think that that is the reality and I totally disagree with all the concerns being expressed that somehow this is racially based. If it is racially based it is removing an injustice that applies only to those people who are predominantly Maori. 
DARREN HUGHES (NZ Labour—Otaki) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 71 
Labour 52; Green Party 9; United Future 8; Progressive 2. 
Noes 46 
New Zealand National 27; New Zealand First 11; ACT New Zealand 8. 
Motion agreed to. 
The question was put that the following amendment in the name of Rodney Hide to clause 103 be agreed to: 
to omit subclauses (1C) and (1D). 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 46 
New Zealand National 27 New Zealand First 11; ACT New Zealand 8. 
Noes 71 
Labour 52; Green Party 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 59 in the name of the Hon Dr Michael Cullen to Part 3 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 71 
Labour 52; Green Party 9; United Future 8; Progressive 2. 
Noes 46 
National New Zealand 27; New Zealand First 11; ACT New Zealand 8. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 3 as amended be agreed to. 
Ayes 71 
Labour 52; Green Party 9; United Future 8; Progressive 2. 
Noes 46 
National New Zealand 27; New Zealand First 11; ACT New Zealand 8. 
Part 3 as amended agreed to. 
Part 4 Amendments to other Acts 
SHANE ARDERN (NZ National—Taranaki - King Country) 
: 
 Here we are again under a Labour-led Government—and it is a good thing that the Minister of Maori Affairs is in the Chamber—debating legislation that adds more costs to business in this country. We have been told: “We’re going to look after small business. We’re going to look after entrepreneurs. We’re going to help people out and we’re going to help Maori in particular.” But despite that rhetoric which we have heard up and down the country here we are passing legislation that does exactly the opposite of the stated objective. 
My colleague the very good member Pansy Wong wondered whether she could carry out this debate in Chinese. I told her I could see no reason for her not being able to do that. The Minister of Maori Affairs answers most of his questions in Chinese so I can see no reason for that not being permissible. But here we are again adding costs under a Labour-led Government to the very people who provide it with the wherewithal that it desperately needs to spend on its social agenda. And there is no better clause to demonstrate that than clause 146(1). Under that clause the definition of “PAYE intermediary” means that somebody else can pay the tax on behalf of another person. That seems fair enough on the surface. I cannot see anything wrong with it. But when we look at the clause in Part 3 which states that taxpayers can be penalised up to 100 percent of the tax outstanding—unless in cases where it is wrong they prove they are innocent—and pay interest on that as well at whatever rate is set by the Inland Revenue Department at the time and then look at what happens in Part 4 clause 146(1) we find that if a person who is making the payment on the taxpayer’s behalf goes broke in the process thereby losing the taxpayer’s money then it is still the taxpayer who is still liable. 
I wonder whether the Maori corporations—and I can see the Minister is listening very carefully now—that presented submissions on this bill to the Finance and Expenditure Committee said they were happy with the notion that if they enter into a new business venture they will be liable for 100 percent of the tax outstanding plus interest on that at whatever rate is set by the Inland Revenue Department and that they will still be liable for that amount even if the person who is paying the Inland Revenue Department on their behalf goes broke in the process. I wonder whether they raised that issue with the select committee. I wonder whether the Minister of Maori Affairs was made aware of that. Obviously the Hon John Tamihere was not made aware of it otherwise he would have spoken about it in his speech earlier. He never mentioned it. However it is an issue. 
I would like the Minister in the chair the Hon Dr Michael Cullen to get some advice from his officials and take a call to clear this up for the Committee and for those who are listening tonight. That is the way it looks to me and I know there were submissions to the select committee by senior accountancy firms in this country that also pointed that out. 
I see that the honourable United Future member Gordon Copeland is listening. I know he has some knowledge in this area so perhaps he will take another call and clear this up. One of the things I know for sure is that people who voted for United Future never realised that party would load all those costs on to them. I am sure that if voters had realised that then United Future would not have got the amount of votes it did. Its leader said the party stands for common sense but this bill absolutely flies in the face of common sense. 
Clause 146(1) has the ability to add a huge cost in litigation extra tax and losses because if an agent who is paying the tax on behalf of a business fails to meet the obligations set down by the Inland Revenue Department it could potentially result in the failure of a few businesses. If that happens the taxpayer who authorised the agent to act on behalf of his or her business will be liable for substantial amounts of funds—and we could be talking about amounts of up to $100000 or maybe $200000—which they may potentially have to pay twice. That will be the case in most Maori corporations because they will be employing an accountant to do this work for them. I wonder whether the Minister has considered that. 
DEBORAH CODDINGTON (ACT NZ) 
: 
 In talking to Part 4 of the Taxation (Annual Rates Maori Organisations Taxpayer Compliance and Miscellaneous Provisions) Bill I want to refer in particular to the amendment to the Student Loan Scheme Act. I see that the amendment is to take in the other changes in this bill whereby there can be a PAYE intermediary. The Student Loan Scheme Act that was brought in was good legislation. This Government instead of just amending the Act to allow the inclusion of a PAYE intermediary has used its powers to change the purpose of that Act totally in terms of getting rid of the interest on student loans when students are still qualifying. That is putting a burden on all taxpayers in New Zealand. I say if it is not fair for students to pay the interest on their loans why is it fair for all the other taxpayers to pay that interest? Allowing students not to pay interest while they are studying is just deferring that payment further down the track although probably not for them but for their children and their grandchildren. 
This Government in getting rid of interest on student loans while people are studying was just trying to get the student vote. I have been visiting universities in the last couple of weeks during enrolment and I have been talking to students. Most of the students in this country who attend universities and tertiary institutions—that is Government institutions not private ones—come from middle to upper class families. These students are not stupid. They realise this is just income churning because the Government is taking money from the middle and upper class families in the form of income tax and corporate tax in the first place and then paying it out to them in terms of interest-free student loans while they are studying. The students are aware of that. They know it is just cynical vote-buying. They also know that capping tertiary fees is just a return to the Muldoonism of price controls and it is reducing the flexibility of universities to increase their income in terms of setting their own fees. I condemn this Government for its cynical ploy to try to buy the votes of students. It might well work with a few of them but there is no way that students are not aware of what is going on. 
The other thing I would like to talk about is clause 148 “Employer to make repayment deductions” or as provided by this bill the PAYE intermediary. Why should this burden be put on to employers? Why should the employer be the tax revenue gatherer for students who have taken out loans? Again it is just more income churning that this Government indulges in—taking from the corporate owners on the one hand and trying to give it back to the children of the corporate owners on the other. This just adds more compliance costs on to employers. 
Employers are the ones who are in the gun if they do not firstly gather it properly and secondly pass it on in the manner that is required by law. In fact there is no reason that employers should have to gather in this repayment of the student loans make the repayment deductions on behalf of the Government. Employers are not required to make repayment reductions for people who take out mortgages. When people take out a mortgage their employer does not take the loan reductions out of their pay packet. 
Hon John Tamihere 
: This is not about mortgages. 
DEBORAH CODDINGTON 
: That member is very lucky if he does not have a mortgage. Many of us are not in such a fortunate position as to be mortgage free. I suppose if people have been living off the taxpayer for most of their lives they would not be mortgage free. 
PANSY WONG (NZ National) 
: 
 I am so glad that the Hon Paul Swain is in the chair during this debate because that Minister has been holding out to be the champion of reduction in compliance costs on behalf of the Labour Party. We now come to Part 4 of this taxation legislation and I cannot find the compliance cost impact statement that this Minister insists any other piece of legislation should have. This Minister was in charge of the Ministry of Commerce which has the obligation to ensure that every department has a compliance cost statement. This is very relevant to Part 4 because this single piece of legislation for a discriminatory separate tax system for Maori organisations creates a whole lot of compliance costs through various legislative changes in Part 4. I think the public has the right to listen to the Minister the Hon Paul Swain who used to champion the reduction of compliance costs telling us why we have this legislation and what sorts of compliance costs will be imposed under the various changes in Part 4. 
But there is a much more significant issue in this part. So apart from wanting the Minister to take a call to explain the compliance costs or the absence of the compliance cost impact statement we also want the Minister to take a call to give an explanation to the taxpayers who have been told by the Government through this legislation that they can appoint an intermediary particularly in the area of PAYE and other deductions. They were told they could appoint an agent an intermediate party to pay that tax. But what happens when that intermediate party collects the tax amount from the taxpayer and disappears or faces liquidation or the company becomes insolvent? What happens if the agent simply disappears with the money? Whose obligation is it to make good to the tax department? 
Part 4 enables taxpayers to appoint an intermediate party to pay tax on their behalf and the Minister should take a call and say what happens if after they hand over this tax payment the intermediate party gets caught in his or her own business situation and the tax money does not reach the Inland Revenue Department. Who can the taxpayer have recourse to? More than that we want to know what happens if through these unforeseeable circumstances and circumstances beyond the control of these taxpayers the Inland Revenue Department also imposes penalties. We have just learnt from Part 3 that the commissioner has a lot of discretion in terms of imposing penalties. Would taxpayers have relief when faced with the situation of being caught in circumstances beyond their control? 
These are very fair and important questions that the Minister should answer. The Government through this legislation will empower taxpayers to appoint an intermediate party to pay their tax and the Minister should take a call to explain their obligations and liabilities and what penalties they face if the intermediate party has difficulties and the money from the taxpayers never reaches the Inland Revenue Department. 
It is incredible that just because of the single action of being able to appoint an intermediate party to pay tax we have about four pages of legislation amending various sections. 
Hon PAUL SWAIN (Associate Minister of Revenue) 
: 
 I want to make a couple of very quick comments. Firstly Pansy Wong asked what happened to the compliance cost statement. As the member may know it was attached to the bill as introduced. It goes to the select committee and then gets incorporated into this and therefore it drops off when the bill is reported back. That is just the way it is. We would not want to have a compliance cost statement following all the way through. It is for the select committee’s use. That was the purpose and the objective. So that is another promise honoured and kept. 
The second point the member raised which is quite a good point is what would happen if an intermediary were to go into liquidation or something like that. If the member were to look back to clause 45—she will remember this from when she read the bill very thoroughly—she would see that anyone who wants to be an intermediary and work in this way needs to set up a trust account and there are quite a lot of provisions about the sorts of criteria. For example someone who has been a discharged or undischarged bankrupt cannot be an intermediary etc. So there are certain provisions in the bill that an intermediary established under this bill has to abide by. They are on page 64 of the bill for the member’s interest. 
CRAIG McNAIR (NZ First) 
: 
 I rise to speak to Part 4 of the Taxation (Annual Rates Maori Organisations Taxpayer Compliance and Miscellaneous Provisions) Bill. I thought I would follow on from Deborah Coddington and repeat the title of the bill in its entirety. 
Rodney Hide 
: What was in it again? 
CRAIG McNAIR 
: I will let the members read it for themselves. 
I want to talk quickly about the PAYE intermediary part of this legislation and also about the whole issue of compliance costs which we are all getting down to once again. Compliance costs are obviously a real concern to New Zealand First. We need to do many things to promote growth within New Zealand and to do that we need to reduce compliance costs. New Zealand First believes that we need a Government that will provide the right conditions for activities such as exporting for example and an environment that innovators can flourish in. 
But I wish to talk about Part 4. It is my understanding that this bill contains rules in relation to the accreditation of PAYE intermediaries by the Inland Revenue Department; requirements on employers who want to transfer their PAYE obligations to intermediaries; requirements also on PAYE intermediaries; and regulations about the trust account in which wages and deductions are held by intermediaries before being paid to employees and the Inland Revenue Department respectively. There are also rules for the termination of the arrangement between employers and intermediaries. 
It is really good that the Minister of Revenue is in the chair. I seek clarification from him about how the Inland Revenue Department intends to administer access rights to PAYE information for intermediaries. I also feel that a question needs to be asked about the equivalent of tax agents’ linking rights for the PAYE accounts they manage. I am sure the Minister is very knowledgable on that subject. 
Getting back to the whole issue of compliance I also want to bring out the point about organisations that are not Maori organisations and therefore do not enjoy the benefit of a preferred tax rate. New Zealand First has said that it is very concerned about that provision. Part 4 of the Taxation (Annual Rates Maori Organisations and Taxpayer Compliance and Miscellaneous Provisions) Bill includes compliance costs and that is what we are talking about. 
Hon Dr Michael Cullen 
: Oh! Aagh! 
CRAIG McNAIR 
: The Minister knows what I am talking about. When businesses or authorities have a slightly competitive advantage over others that will obviously cause a bit of havoc. As we were going through the select committee process in the Finance and Expenditure Committee which I am on we asked the submitters questions about a whole range of issues. I want to talk specifically about issues that pertain to Part 4—such as asking the submitters whether their clients were worried about any of the elements of that part. 
BRIAN CONNELL (NZ National—Rakaia) 
: 
 I want to deal with clause 146 which deals with PAYE intermediaries. Other members have picked up that clause as well. In particular I want start by turning to the commentary which goes along these lines: “The bill contains provisions allowing employers to engage an accredited intermediary to assume the employer’s PAYE obligations.” That appeals as a good idea although a number of submitters were concerned about the viability of some of those intermediaries. What happens—because I do not see anything in the bill that covers it—if one of those intermediaries goes belly up? In particular I want to know—and maybe the Minister in the chair the Hon Dr Michael Cullen can tell us—who would be responsible. Can members imagine the grief and the finger-pointing that would go on if that event were to take place. 
I suppose the Minister might be able to tell us as well what the compliance impact statement is. The Minister who was in the chair just prior to this Minister the Hon Paul Swain said it was attached to the bill but we cannot find it. I am asking the Minister in the chair to educate the Committee by taking a call and telling us exactly what it is. What protection would the employee or the person who owed the tax obligation have if that person had paid it to the intermediary and the intermediary went belly up? Would there be sufficient funds in the trust account to cover that liability and the penalty as well? Maybe the Minister could also take a call on that. 
The downside of this legislation of course is that it will introduce a new layer of compliance. Others have touched on that issue as well. I turn to a compliance statement that I have picked up. It is an analysis undertaken by Business New Zealand. It is quite independent and it tells us that a medium-sized business in this country will face an extra $43000 in compliance costs. That business has had those costs foisted on it by this Government in the last 12 months. That is a staggering amount of money and when one understands the expense-to-income ratio of about 1:7 it is enough to send most small businesses under. If this Government could do something about reducing compliance costs it might not have to put in place this type of racist tax regime. 
The CHAIRPERSON (H V Ross Robertson) 
: Order! 
Rodney Hide 
: I raise a point of order Mr Chairperson. I think the Chair is ruling that to call a tax regime racist is somehow out of order. It certainly is not. One is not allowed to accuse another member of being racist but one can certainly call a policy racist. 
The CHAIRPERSON (H V Ross Robertson) 
: That is not what I was doing Mr Hide. I refer the member to Speaker’s ruling 7/1 in the  
Supplement to Speakers’ Rulings 
 which refers to judging whether a word is appropriate in terms of whether it might lead to disorder. I was just cautioning the member to be careful. 
Rodney Hide 
: The member said it and people were accepting it. It has been said all the way throughout this debate and there has been no disorder. I think that the member’s point has been accepted as fact. I do not see how the Chair can rule that word out when it has been said in a way that has not caused any disorder. 
The CHAIRPERSON (H V Ross Robertson) 
: I thank the honourable member. I have been listening to the debate and I am concerned about the context in which the word was used. The member should not question the ruling. The ruling has been made. 
BRIAN CONNELL 
: I was making the point that this bureaucracy and those compliance costs have been foisted upon small businesses because of the introduction of this racist tax. It is something that will do immense damage to our international reputation. If we want to grow our economy—as we do—we need to attract foreign capital and we need to embrace those hard-working Kiwis who are prepared to invest their life savings in starting a business. I expect and I think they would expect to be treated exactly the same way as all other New Zealanders. 
Part 4 deals with the amendments to other Acts. I understand that some of those amendments are necessary but I submit that if it were not for the Government’s intention to introduce this type of legislation they would not be necessary. The select committee was given good advice. Maybe the Minister could take a call to explain why he rejected the advice the select committee was given that this legislation was discriminatory and against the New Zealand Bill of Rights Act. Surely the Minister is not going to shake his head and say that people such as Geoffrey Palmer—a former Labour Prime Minister funnily enough—do not know what they are talking about. Geoffrey Palmer is revered as one of our most special constitutional lawyers. 
The question we have to ask ourselves is how much governance we want in our lives. 
DARREN HUGHES (NZ Labour—Otaki) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 71 
Labour 52; Green Party 9; United Future 8; Progressive 2. 
Noes 47 
New Zealand National 27; New Zealand First 12; ACT New Zealand 8. 
Motion agreed to. 
A party vote was called for on the question  
That Part 4 be agreed to. 
Ayes 71 
Labour 52; Green Party 9; United Future 8; Progressive 2. 
Noes 47 
New Zealand National 27; New Zealand First 12; ACT New Zealand 8. 
Part 4 agreed to. 
The Committee divided the bill into the Taxation (Maori Organisations Taxpayer Compliance and Miscellaneous Provisions) Bill the Taxation (Annual Rates of Income Tax 2002-03) Bill the Student Loan Scheme Amendment Bill and the Child Support Amendment Bill pursuant to Supplementary Order Paper 60.