Cunliffe David: Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
Cunliffe David: Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
[Volume:669;Page:16191] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Who would have thought that shortly after 9 this morning when we commenced debate on this bill we would be here at about 9 tonight still debating the same bill? That is occurring for two very simple reasons. One of the very simple reasons is the Leader of the House. The other very simple reason is that this bill is a blatant abuse of process. It is an abuse of the House because the speech the Minister read but did not understand is a speech about the bill as introduced. That was a speech about the bill that was considered by the Finance and Expenditure Committee. That was a speech about the bill that was put out for public submissions. It had nothing to do with the 60 or 70 percent of this bill that was introduced under urgency at the eleventh-hour by Supplementary Order Paper. Not only was it 70 percent of the content but it was about 95 percent of the value by tax revenue. It is the Supplementary Order Paper that introduces fundamental structural amendments that impact over $2 billion a year of tax loss which is currently funnelled through loss attributing qualifying companies.  
It is the amendments and not the bill that take the current loss attributing qualifying company rules and introduces an entirely new class of company called the look-through company which represents a very timid step in the direction of making it less easy for corporate arbitrage to write off company tax losses on personal income. It possibly would have been a measure that one day could have been supported by other parties had it been through proper scrutiny. But the reason we are opposing this bill tooth and nail in the House today is that the Government by malice and intent has denied the public of New Zealand the opportunity to participate in that debate. It has denied the public of New Zealand the opportunity to participate in that debate.  
This is a totally inappropriate misuse of parliamentary process and in my view it was made worse not better by the lame excuse of the Minister of Revenue who said that just because it had been announced in the Budget and a discussion paper had been put out it was legitimate somehow to bring provisions to the House by Supplementary Order Paper. I am afraid that that is not so. As a matter of simple logic to do that for this bill would entitle any Government to do that for any tax bill because very few affect more revenue than this amendment does at $2 billion. If that is the case then we could kiss goodbye the generic tax policy process that is one of the most valuable institutions of our fiscal tradition. It has been respected across both sides of the House and across multiple bills for many years but this Supplementary Order Paper undermines that process.  
The loss attributing qualifying company issue of course has dominated the substance of the debate and it dominates three parts—over 70 pages—of the amendments.  
Hon Gerry Brownlee 
: Has the member got an LAQC? 
Hon DAVID CUNLIFFE 
: No the member does not have a loss attributing qualifying company. Has that member got one?  
Hon Gerry Brownlee 
: No. 
Hon DAVID CUNLIFFE 
: Oh jolly good! Well enough Kiwis do I tell Mr Brownlee to avoid $2.5 billion worth of tax and that is why we care about it because his Government is running a $13 billion per year deficit and the Government could do with some of that if it could bother to clamp down on the avoidance. But because the Government has not done so and because it has not given the public or the business community the opportunity for a fair say Government members will be here all weekend with their paltry list of pre-Christmas rushed legislation—all weekend because the Leader of the House has screwed up the process. He has overloaded the urgency motion and he has allowed his Minister of Revenue to introduce a totally inappropriate Supplementary Order Paper. It is one thing for the Minister to make that mistake; it is entirely another for the Leader of the House to fall for the pressure no doubt from officials through the Minister that that just had to be done. Well it did not have to be done and it will not be done easily because members of the Labour Opposition will fight this bill—and have fought the bill—clause by clause part by part and line by line to the utter limits of parliamentary process.  
The bill also deals with the matter of GST and the opportunity for zero-rating some transactions. That has allowed—and the Speaker has ruled in terms of scope—debate about the zero-rating of other forms of goods and services most notably fresh fruit and vegetables. New Zealanders in their homes and in their workplaces know that these are tough times these are tough years. Household budgets are under pressure and it is just this week that we have learnt some important new facts: the average household is $30 a week worse off than it was last year by $18 per average income earner. We know now that for seven straight quarters annualised GDP per capita has gone backwards—that is real income—which means that average Kiwis are worse off today than they were when this National Government was elected. They are worse off today than when this National Government was elected.  
That is why the polls overwhelmingly show that nobody buys the public relations spin from the Beehive about the tax that has made them better off. They do not buy it because it is not true. They do not buy it because they know that they might have 10 bucks in the wallet but the groceries are costing 30 bucks the power bill is costing 5 bucks and so on and so forth. There is no relief in this bill; even though it empowers the zero-rating of GST it contains no help for hard-working Kiwi families and that is why Labour is going to bring that help. That is why Labour will deliver GST zero-rated fresh fruit and vegetables.  
The bill talks about KiwiSaver but it takes no opportunity to restore the cuts this Government has so short-sightedly made to the single most successful savings scheme in New Zealand’s history. It was the single most successful scheme and was undermined by this Government when it cut employer contributions and Government incentives in half. For that reason the rate of growth of the stock of savings has been reduced and that is a very serious problem. Standard and Poor’s is about to drop our credit rating because we have an appalling savings gap.  
That brings us full circle because Standard and Poor’s told us that we are not only bad savers but we are very bad investors. Because such savings that we did have instead of being put into productive businesses that would create jobs and incomes—things people say National once used to represent—were put into housing. We effectively borrowed internationally to bid each others’ house prices up. Why? One key reason was that there was a tax incentive to do it and it is embedded in this bill and is still now perpetuated by this bill. There is a tax incentive that one could run a loss on a rental property and write it off not only against the future earnings of the property which would be fine but against the personal income of the owner or the shareholder. There is no logic and there is certainly no economic rationale for that to be continued.  
So this bill in summary is a sham. It is a sham and it is a wasted opportunity. There was a good process at the Finance and Expenditure Committee. There was a good process in dealing with the original bill that made some amendments made some improvements and—I give credit to the chairman of the committee Craig Foss—brought the committee to consensus. That consensus was shattered on Tuesday when this enormous Supplementary Order Paper was introduced. The Government introduced this enormous short-sighted wasteful and redundant Supplementary Order Paper.  
Why is it redundant? I tell members that when Labour returns to the Treasury benches in 2011 one of our first acts will be to crack down on tax avoidance because to us in tough times personal responsibility means that everybody pays their fair share. That is the Kiwi way—a fair suck of the sav and a fair day’s pay for a fair day’s work. We all put our shoulders to the wheel in hard times to keep the truck moving forward. That means fewer outlets and fewer loopholes for fancy-pants corporate tax advisers and lawyers. We need to make those loopholes dramatically smaller. This bill had the opportunity to do that and it failed.  
It is a matter of deep regret to the Labour Opposition that although we have used every opportunity in this debate we know in our heart of hearts that the scrutiny we have been able to give to the detailed technical content of areas of this Supplementary Order Paper has not been anywhere near adequate relative to the importance of the subject matter. The reason for that is of course that they cross-reference back to four principal Acts. They have multiple connections and it would take an expert many many weeks to follow their way through the chain.