Nash Stuart: Taxation (Business Tax Measures) Bill — Second Reading 
Nash Stuart: Taxation (Business Tax Measures) Bill — Second Reading 
[Volume:652;Page:1945] 
STUART NASH (Labour) 
: 
 Members who wanted to know about the Taxation (Business Tax Measures) Bill would have had no idea what Mr Tremain was talking about because I think he mentioned it only once. 
I stand in support of the Taxation (Business Tax Measures) Bill because the Labour Party supports small businesses. In fact Labour supports all New Zealand businesses in a positive and proactive way as no other political party does. First of all let me say that I think all parties need to work together in this time of economic crisis to do what is best for the country. That is why I support this bill. Does it go far enough? No and Labour would have taken it further. 
David Bennett 
: In your dreams mate—in your dreams. 
STUART NASH 
: However members of the Finance and Expenditure Committee all agreed on a bipartisan approach—did we not I ask Mr Bennett—to immediate economic reform in a way that does not allow for political interference and at a time when the country’s best interests need to be considered. In line with the country’s best interests Labour will be putting forward amendments that we feel will considerably improve the bill and we hope that they will be received in the same bipartisan spirit of support that we have provided to date in pursuit of the nation’s economic health. 
This bill is targeted at the 96 percent of Kiwi businesses that are classed as small to medium sized enterprises. The New Zealand definition of a small to medium sized enterprise is a business with 19 employees or fewer. Such businesses employ approximately 60 percent of the country’s workforce and without a question of a doubt they are the backbone of the New Zealand economy. 
What does this bill set out to achieve? First and foremost there is recognition from all parties that this economic recession the country now finds itself in is hurting New Zealand businesses and industries. I was speaking to an importer of petrochemical derivatives just yesterday and he was saying that business is terrible. For most of his clients now it is just a matter of survival. These are the manufacturers who often see the signs of destruction first because they are producing for the retailers and wholesalers who then onsell to the customers and consumers. If business is hard for those at the back end of the supply chain then it will be reflected in the environment and conditions at the front end. 
If we who are resident in this House can help in any way to mitigate the effects of this crisis and therefore alleviate the suffering in the manufacturing sites and shop fronts of New Zealand’s towns and cities as well as in the living rooms of the nation’s homes then we as elected representatives charged with the mandate of securing this wonderful country’s future must act in a manner that delivers the optimal benefit in a timely manner. This bill is but a start. I ask Mr English where the rest of the plan is. 
This bill could have been bolder and should have been stronger. Now we must accept the substance of this bill which we in the Labour Party will help to improve through the Supplementary Order Paper process. We must then provide the Government agencies responsible for delivering its outcomes with the resources needed to implement it in the way intended by Parliament. I hope that Mr Dunne has advised the Inland Revenue Department in advance that it has a very important and proactive role to play in the easing of the economic and financial woes of many good New Zealand citizens. From what I have seen of the performance of Inland Revenue Department staff while in my role as a Finance and Expenditure Committee member I have formed a view that they are hugely competent and highly committed to doing what is right for the people of New Zealand. 
I go back to my original question. What does this bill seek to achieve? Well four new measures have been introduced by the coalition Government. First there is the reduction of the provisional tax uplift rate to apply from 1 April 2009. This rate drops from 105 - 110 percent to 100 - 105 percent. This uplift rate is essentially the rate at which companies are allowed to estimate their tax for the following year based on previous earnings. 
Labour argued that this rate should have been lowered even further. One submitter who presented to the Finance and Expenditure Committee suggested that this rate should have been dropped to 80 percent given the dire economic climate and the pain that many businesses are feeling. It was acknowledged by all that 80 percent was perhaps too low and Labour argued that it should have been closer to 100 percent while still acknowledging that even this may have been optimistic considering the economic times and the hardship that many companies are facing. I doubt that many companies today will be predicting the same level of taxable earnings as they were 12 months ago. But this measure is a start and a move in the right direction. 
There is an increase in GST payment thresholds from $1.3 million to $2 million which will apply from 1 April 2009. There is the introduction of the new threshold of $10000 below which all business-related legal expenses are fully deductible which will apply from the 2009-10 income year. There is an increase in the threshold under which the fringe benefit tax (FBT) is not required to be accounted for with regard to minor benefits provided to employees. This increases from $15000 per year and $200 per quarter per employee to $22500 per year and $300 per quarter per employee. 
Then there are eight proposed measures that are either directly from the Labour Party manifesto or are slightly altered but are still Labour Party policy. I guess the old cliché is true—imitation is the greatest form of flattery. If so we in the Labour Party blush and tip our hats because this bill is very similar to one that we would have introduced only not as robust forward-thinking or stimulatory. Dr Cullen should take a bow because in essence and form if not substance this is his bill. For example the enhanced Labour measures include the increase in pay-as-you-earn once-a-month filing and payment threshold from $100000 to $500000; the increase in the FBT annual filing threshold from $100000 to $500000; and the increase in the GST registration threshold from $40000 to $60000. All these measures apply from 1 April 2009. 
If we look at the five measures that have been directly lifted from Labour Party policy we see the increase in low-value stock trading thresholds to apply from the 2009-10 income year; accounting for financial arrangements also to apply for the 2009-10 tax year; the extension of FBT annual filing to include closely held businesses whose FBT liabilities are restricted to one or two vehicles used by owner-employees regardless of their annual PAYE deduction; the increase in provisional tax use of the “safe harbour” threshold to apply from the 2009-10 tax year; and an increase in the GST 6-monthly return filing threshold to apply from 1 April 2009. 
That is nice but perhaps I was a little hasty in asking the good doctor to take a bow as I would not want the honourable member’s fine legacy to be associated with a bill that he would have substantially changed to better reflect the dire economic mood at the time of final drafting. These were Labour ideas before the full force of the economic crisis was at least recognised if not its true magnitude fully understood. Dr Cullen would have gone a lot further. 
We know that the Labour Party is the party for small business—we all know this. 
David Bennett 
: Come on! 
STUART NASH 
: I say to Mr Bennett that one has only to look at the statistics to see that this is true. Mr Tremain’s firm in Hawke’s Bay did a hell of a lot better under Labour than it has ever done under National. Let me give members just one statistic. Annual business growth in the time of the last National Government was between 5 and 8 percent. In the first 6 years of the previous Labour Government that growth was between 15 and 18 percent. The economy actually grew by over 25 percent under the stewardship of Helen Clark and Michael Cullen. What a legacy Messrs English and Key have to follow! [ 
Interruption 
] I say to Mr English that if this bill is anything to go by he is not even close to “Labour-lite”; his legacy may be more of a brown colour. 
The last great recession took a war to fully solve and we certainly do not want to go through that even though globally geopolitical issues will become salient as the forces of nationalism begin to rear their ugly heads. In New Zealand the last great recession was expertly managed by a Minister of Finance who was I am proud to say a giant when compared with the member who is currently occupying that portfolio. With those words I support the bill’s passage through the House. We will be voting for it.