English Bill: Taxation (Business Tax Measures) Bill — First Reading 
English Bill: Taxation (Business Tax Measures) Bill — First Reading 
[Volume:652;Page:1080] 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I rise to support the Taxation (Business Tax Measures) Bill. This is part of the Government’s overall plan to deal with the particular challenges that the New Zealand economy faces. 
The member who has just resumed his seat has overlooked the fact that under the previous Government somehow well before the rest of the world and long before the global crisis New Zealand managed to get into its own recession. In fact that has been one of the events one aspect of history that has to some extent hamstrung the choices of the incoming Government. The member also suffers from the delusion which is widely shared among Labour members that to announce something is to do it. Well it is not. In Labour to announce something is certainly not to get any money for it let alone to make any decisions about how a measure might actually be implemented. 
Hon Gerry Brownlee 
: No it is the first of a six-stage step towards doing it. 
Hon BILL ENGLISH 
: It is or it is the 12-step method of Alcoholics Anonymous. One of the primary functions of the new Government has been to find Labour’s promises littered around the landscape and then to find that the announcements we thought had been given in good faith were not it turns out given in good faith at all. [ 
Interruption 
] As the member is finding day by day his relevance to what is really going in the economy is becoming pretty marginal. 
Our plan is pretty straightforward and it is to protect people from the sharp edges of recession. That is as much as can be achieved. We cannot roll back a recession. There is no stimulus package large enough or necessarily effective enough to actually prevent a recession. The second and in my view just as important part of the plan is to get the economy ready for recovery. This recession will end and at that stage we will need an economy that can grow fast so that we can replace the jobs that will inevitably be lost over the next period of months as the world economy goes into coordinated recession. That economy will have to be in much better shape than it was in when it went into this recession. Otherwise it will not be able to grow. So these measures sit alongside other measures such as the announcement of the extensive revision of the Resource Management Act as part of a suite of changes that will occur over the next 12 to 18 months or couple of years to get this economy into shape. 
A few people—only a few—have criticised the measures in this bill for small and medium sized enterprises as being insufficient. The fact is that there is no one big shot that will make it a lot easier for businesses to find their way through this recession. I do not know what the member opposite is suggesting. If for instance car dealers are finding that New Zealanders just are not buying cars what does the Opposition propose that the Government should do about it? 
Hon David Cunliffe 
: How about keeping them in jobs? 
Hon BILL ENGLISH 
: Well we could go and buy cars for them so that the car salespeople can keep their jobs! You see when we get past the crisis management vision workshop plan that Labour is proposing there is not much left to it. Getting this economy in shape to grow again will take 100 different measures none of which is a big shot but all of which focus on productivity and confidence in business so that businesses will have the confidence to invest to replace jobs and to lift the incomes of New Zealanders. 
I want to focus on a couple of aspects of this particular package that I think are important. One is the change in the use of money interest. The previous rates were simply way out of line and needed to change so this package cuts those interest rates quite considerably. The Government can hardly go around complaining about the interest rates that banks are charging on credit cards when the Inland Revenue Department is charging similar rates for underpaid tax. So the Minister of Revenue is making the adjustment pretty much according to the formula and it is quite expensive—$72 million I think per year. That money will stay in the pockets of taxpayers who would otherwise be paying very high rates of interest. 
Probably the more important measure in the shorter term anyway has been removing the uplift on provisional taxpayers. They are people who do not estimate their provisional tax and automatically have to use an income that is 5 percent higher than it was in the previous year. The effect of removing that uplift is to leave $250 million in businesses’ bank accounts across New Zealand. People who have operated a small or medium sized business—in fact even a large business—will know just how difficult it can be to incur tax liabilities related to their previous profitable year then find themselves in an unprofitable year where cash flow is pretty limited and they have to find the money to pay the extra tax. So this measure is a pretty decisive move to leave that money in the bank accounts of businesses around New Zealand. 
Those are the two principal measures. There are a range of other ones some of which as the member has pointed out were already included in a tax bill. We have decided to proceed with those measures urgently plus to add a number of others all of which are focused on simplifying the taxation system and trying to reduce the compliance costs for business. 
We have had the odd comment from for instance the Institute of Chartered Accountants of New Zealand that some of these thresholds do not go far enough. Well it is a pretty straight trade-off: the more the thresholds are raised the more revenue the Government can potentially lose. Given that the revenue outlook for New Zealand is pretty poor we will actually see tax revenues drop over the next couple of years which has not happened for a long long time. We need to make sure we are striking the balance between promoting the vigour and efficiency of business on the one hand and making sure we maintain a reasonable tax base on the other hand. So these measures will be fast-tracked so they can apply to businesses just as soon as possible. 
Other propositions have been put up by the Small Business Advisory Group about reducing compliance costs. We are very keen to look at those. I myself believe that there is an opportunity right now for the Government to get reasonably aggressive about the way that it sets out to reduce compliance costs and to change some of the balances that have been built into policy over the last few years. 
But this is one measure that will stand alongside many others over the next couple of years. We have dedicated ourselves to undoing the misdirected and complacent policy of the last 9 years which has left New Zealand business lacking in confidence when it needs it most and confused under the previous Government about whether that Government was in favour of wealth creation or against it. There can be no doubt now about what the public want to see and what this Government will deliver: a strong focus on creating jobs and creating wealth. We have learnt that when the economy grows it is good for everybody—everyone benefits. A rising tide raises all boats. In the previous year and this year in New Zealand we are experiencing for the first time in a while growth stopping and the economy actually shrinking. 
This measure will be there along with dozens of others to help to lift the potential as we come out of this recession. We will do that in a way that does not pile up problems for the future. Everyone will ask why we do not do more now. As they are finding out in the US and Australia the public are quite wary of piling up large amounts of debt because they know that it is their debt and that they will have to repay it. It is easy for politicians to say “I’ve solved all your problems today and I’ve spent $2 billion on doing it.” but the public are going to have to pay back every dollar with interest before too long. In a country that already has high levels of debt it is incumbent on the Government to be responsible. That is why this kind of measure strikes the right balance between giving some cash help to businesses which is debt finance that will help them in the shorter term but does not create larger problems for the future. 
This bill is a sensible measure that deserves the support of the whole House and I hope that is what it gets.