Mallard Trevor: Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill — In CommitteeText is incorporated into the Bound VolumeMallard Trevor: Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill — In Committee[Sitting date: 18 February 2014. Volume:696;Page:16019. Text is incorporated into the Bound Volume.]Hon TREVOR MALLARD (Labour—Hutt South): Thank you Mr Chairperson for giving me a call in this debate on the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill. These clauses—clauses 1 and 2—are particularly important because what we are doing here is effectively confirming the continuation of our taxation system as well as making what is a series of both minor and major adjustments to it.I would like to differentiate myself somewhat from the comments made by my colleague Dr Clark. I am not going to say that the honourable Minister of Revenue Todd McClay should apologise on his own behalf for the cock-ups that occurred in the 5 years that Peter Dunne was running the revenue portfolio and failed to do his job in the development of an appropriate computer system. If one is absolutely fair then it might be that during the last year or two of the Labour Government when Peter Dunne was failing to do his job properly then there might have been some criticism that could have occurred. But what we do know is that from the briefings to the incoming Government in 2008 and in 2011 the briefing that the Minister received in the middle of 2013 and the update that occurred at the end of last year the National-led Government—the John Key - Government—has known that it has not had a fit for purpose information technology system in the Inland Revenue Department.It is not often that I am generous to National Party members but I think we all know that there is within the National Party one person who can get his head around these issues. Going right back to the INCIS project the Hon Maurice Williamson wasrepeatedly on the record—repeatedly on the record—for warning the Bolger Government when he was a Minister in that Government that the approach the police were taking in that particular case would not work. It is probably not fashionable these days with open source and all of the new things that I do not really understand—but which Clare Curran I am sure will explain to me afterwards—but in those days what he said was that if Microsoft could not do it then it was pretty unlikely that the New Zealand Police would be able to develop the system. And that was the case here. The problem—The CHAIRPERSON (Lindsay Tisch): Come back to the bill.Hon TREVOR MALLARD: The point that I am getting to is that in this legislation Mr Chairman we are deferring the implementation of a child support system that can only be fairer than the current one. My challenge is this. Is there a single member of Parliament at least one who has a constituency—and I think that most members who are currently in the Parliament other than Mr Goldsmith do have people coming to see them to discuss taxation. Most members other than Mr Goldsmith who deliberately loses—he is a deliberate loser Mr Goldsmith when it comes to constituency matters—do in fact have people coming to see them who want to discuss taxation issues and most of us at least every month get someone who comes and tells us about the anomalies and the unfairness in the child support system.In fact I see no one in the Parliament who is prepared to defend as fair the current child support system. And so for a number of years at least 5 and probably 7 it was Peter Dunne’s job to work on developing a computer system that inter alia would handle those changes. What has he done? He has spent $50 million. He has spent $50 million mainly on overseas consultants—something that I find particularly suspicious. I find it particularly suspicious that such a large amount of money has been spent on overseas consultants. It is money that has gone offshore and money that ignores the New Zealand information technology industry. Did Government members even go and talk to Jade Software Corporation? No they did not. There are people in New Zealand—[Interruption] Not if you are going to spend what is it $700 million on the change. So $700 million is the current amount and rising.Dr David Clark: Up to $1.5 billionHon TREVOR MALLARD: Up to what?Dr David Clark: Up to $1.5 billion.Hon TREVOR MALLARD: So it is between $700 million and $1.5 billion on upgrading the Inland Revenue Department’s system and what all of us know is that the appropriate way of doing that is to do a bit of a base system and to do the rest of it in chunks—break it down and invite New Zealand firms to bid for it. Keep the money in New Zealand.Is anyone surprised when you spend $50 million on overseas consultants that they recommend an overseas solution? Well I am relatively certain that most of these consultants get matching finance do they not? They get matching finance from the people whose systems they are effectively paid to supply. That is an outrage but unlike Dr Clark I am not ungenerous. I think the Minister who is currently in the chair and who is the Minister responsible the Minister of Revenue should apologise on behalf of the Key Government. But I am not yet assigning him personal responsibility for 7 years of failure on the part of Peter Dunne to do a good job and to convince people. I will blame John Key because John Key could have put Maurice Williamson in charge of the project. He could have got some expertise. John Key could have got someone—we are not in question time so I am allowed to refer to Maurice Williamson’s professional background—who has a professional background in the information technology area and understands how these things work—but not now.The next point that I would like to make is that I do not think I have ever seen a commencement clause that is as ugly as clause 2 of this bill. This commencement clause refers to first of all—and it is outrageous—section 114 coming into force on 24 October. It is not 24 October 2014 but 24 October 2001—2001. It is retrospective taxation of the worst possible form. Is that alone? No section 116B the responsibility of Paul Goldsmith as the chair of the Finance and Expenditure Committee comes in on April Fool’s Day of 2005.I thought taxation was meant to be prospective. I thought we were meant to have clarity going forward. Are we now taxing people for income or not allowing deductions from the periods starting 2001 and 2005? If it is true it is absolutely outrageous. There are a few further minor sins. Sections 14; 16; 29(1) (2) (3) (5) and (9); 31; 57B; 59(1A) and (3); 65; 99; 99B; 102(2); 103(4); (13); (39); (52); 112; 112C; and 117B(a) all come into force on April Fool’s Day 2008.Hon Member: Which clauses?Hon TREVOR MALLARD: I cannot tell you again from memory but what I can tell the Committee is that this bill is entitled the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill 2013. So this is legislation that at its very worst was meant to come into effect last year. What we have got is legislation that is even further outdated.