Woodhouse Michael: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — In Committee 
Text is incorporated into the Bound Volume 
Woodhouse Michael: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — In Committee 
[Sitting date: 28 August 2012. Volume:683;Page:4831. Text is incorporated into the Bound Volume.] 
MICHAEL WOODHOUSE (National) 
: 
 It is my pleasure to take a call on this bill the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill. But before I do I must admonish my colleague the member for Rotorua gently for his faux pas in describing me as the member for Dunedin South. Of course I am the member in Dunedin South. In fact if you ask the constituents of Dunedin South they would probably say that I am the member for Dunedin South. The interesting thing is that if you ask the constituents in Dunedin North they would say that I am the member for Dunedin North as well. So I do understand the confusion. 
But in respect of the call from the member who is the Dunedin— 
Hon David Cunliffe 
: I raise a point of order Chairperson. It is clearly outside Speaker’s directions for a member to refer to himself even in the imagined third person as the member for Dunedin South when we all know that he has been the member rejected by— 
The CHAIRPERSON (Eric Roy) 
: Order! That is making a political point. The member actually made no such claim. 
MICHAEL WOODHOUSE 
: Thank you Mr Chairperson. That saves me speaking to the point of order. I will say of the member for Dunedin North that I think he is the revenue spokesman for Labour and I will give him this: he is definitely smarter than the previous spokesman on revenue that Labour had. Remember Stuart Nash? In fact I must say that I was very very worried that Mr Cunliffe was actually going into that territory that Mr Nash used to go to in wanting to tax farmers’ revenue. Remember that? Labour wanted to tax farmers’ revenue. 
The other credit that I will pay Dr Clark is that he is becoming very good—very good—at telling half a story extremely well. It is true according to recent reports that 50 percent of New Zealand’s top earners are not on the top tax rate. I want to elaborate on the comments of Mr Dunne the Minister of Revenue about why that is. I will remind members about the Tax Working Group report that was released in 2009. It said that up until the late 1980s and early 1990s we had one of the least distortionary tax systems in the world. By the time National came back to office in 2008 it was one of the most distortionary in the world with a punitive top tax rate but legitimate tax-planning opportunities for those high-income earners to move their income into trusts and into companies. Which was the Government that allowed those tax loopholes to occur? 
Todd McClay 
: Who? Who was it? 
MICHAEL WOODHOUSE 
: It was the previous Labour Government—actually asleep at the wheel in my view. But it is crocodile tears now to say that those top earners were given the opportunity to legitimately tax-plan and then criticise them for taking those opportunities. I am very proud of the fact that this Minister and this Government have actually reduced those opportunities closed those loopholes and reduced the tax rate away from a punitive 39c in the dollar and down to 33c in the dollar. 
But more than that in Dunedin North and at the University of Otago one of the biggest things that people said to me during the campaign last year in respect of student allowances was that the student allowance was available to the very poor and the very rich and the thick middle was not getting the opportunity to take student allowances and that was not fair. We agreed and we have changed that by changing the definition of income for the calculation of student allowances—something that Labour should have done at the very start when it put in place the interest-free student loan scheme and the student allowance system that it did. 
I want to remind this Committee when that side bleats about tax rates that we now have three-quarters of the taxpayers in this country paying no greater than 17c in the dollar marginal tax rate and their full tax paid is about 15c in the dollar. Nearly half of the families in New Zealand pay no net income tax after Working for Families accommodation supplements and other income transfers. We think that that is pretty fair. What we do not think is fair is to tax further the 17 percent or so of New Zealanders who are paying about 70-something percent of net income tax in this country. That is punitive. That is envious. That is jealousy. 
Dr David Clark 
: Why is poverty growing? 
MICHAEL WOODHOUSE 
: And here he is—he interjects. This is another good “half a story very well told” because median take-home income has grown every year under this Government. The net take-home pay gap with Australia has closed and the only reason that the Gini coefficients are starting to drift away in the same way as they closed last year is that very high-income earners took an extremely large whack and it is growing again. Maybe that top income bracket has grown slightly faster than the bottom two tiers and the solution to that is jobs and growth and job strategies—none of the things that we hear from Labour. 
In fact in respect of monetary policy Labour wants to loosen monetary policy to reduce exchange rates. Those strategies are really the fly on the elephant’s butt I have to say because it is simply not possible to move them in the way that Labour wants to. But there is no detail whatsoever. I am still completely in the dark about what monetary policy Labour would follow were it in power. It talks about a capital gains tax but who would be affected? It talks about putting the top tax rate back. We all understand what that means. No detail—