Clark David: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — In Committee 
Text is incorporated into the Bound Volume 
Clark David: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — In Committee 
[Sitting date: 18 September 2012. Volume:684;Page:5349. Text is incorporated into the Bound Volume.] 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 I rise to speak to Part 5 of the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill. Indeed there is much to say about this part in the bill. There is a great deal of— 
Maggie Barry 
: Something new? 
Dr DAVID CLARK 
: —interest in this part of the bill. Ms Barry asked whether there is something new in this part of the bill. I will be interested to see what she contributes to the discussion on this part of the debate. She has been remarkably quiet up until now. 
There have been a number of salient points raised and many questions asked of the Minister in the chair but we have noted so far that the Minister in the chair has been reluctant to answer any of them—indeed reluctant—[ 
Interruption 
] “Apparently deaf” says my colleague. We seem to have a new Minister sitting in the chair the Minister of Defence so we can try our luck with this one and see whether perhaps he might be willing to answer some of the questions that have been raised earlier around the loopholes that are created the compliance costs on business and whether there is an estimate available of those compliance costs. I raise these questions now in passing so that the Minister can perhaps turn to his officials and raise this issue with them if indeed he would like to address those concerns that were raised about further compliance costs and National’s growing record of being on the wrong side of small business. 
I want to say more right now about the KiwiSaver clause in this bill. Clause 154 in the bill deals with KiwiSaver. This bill raises the employee contribution for KiwiSaver from 2 percent to 3 percent. In itself that is a 50 percent increase as my colleague Damien O’Connor pointed out earlier. It is a very modest increase. We know that National has been flip-flopping all over the place on KiwiSaver. I guess we can comfort ourselves that at least this flop is in the right direction. It is only 2 years ago that the Government cut the employee contribution from 4 percent to 2 percent. What this legislation does is increase it from 2 percent to 3 percent back up again—halfway back up. It went from 4 percent down to 2 percent and now it goes from 2 percent back up to 3 percent. So we will wait for the next instalment from this Government in terms of its KiwiSaver policy. I have made the point before that the National Government has more positions on KiwiSaver than the Kama Sutra. That is clear. The National Government has cut it previously. It was to have been progressively raised under the plan that the previous Government had to an 8 percent default rate of gross income by April 2011 for employees and a 4 percent default rate for employers. 
On KiwiSaver the National Government has discontinued the employer tax credit and that effectively subsidised employers for the costs of providing KiwiSaver. It has capped the employer superannuation contribution tax-exempt at 2 percent and previously it was to have been 4 percent. You see the Government is all over the place. It has been reining it in and now it is just nudging it up. It discontinued the fee subsidy of $40 per annum so again it was reining the system in and that is entirely inconsistent with what we see in this bill. That was aimed at ensuring that the accounts with low balances were not eroded through taxes. 
The KiwiSaver plan that the Labour Government put together was a good one. It was going to grow savings so that we had money in our economy for investments and so that we addressed the issue of capital depth that holds us back when we compare ourselves with say Australia which has a $1.3 trillion superannuation fund sitting there—money looking for a home looking for a place to invest profitably. And we wonder why Australia is getting ahead. 
National also repealed the Employment Relations Amendment Act that had aimed to ensure that employer contributions be on top of an employee’s pay. Under National’s changes employees and employers now have the ability as part of good-faith negotiations to contract out of this requirement. It is all about pulling the savings system back. Now in this piece of the legislation this piece of tinkering sees the employee contribution rate for KiwiSaver which the National Government took from 4 percent down to 2 percent go halfway back up to 3 percent. At least this flop as I said at the outset is in the right direction but all this chopping and changing on KiwiSaver by the National Government undermines Kiwis’ confidence and that in itself does nothing—absolutely nothing—to improve our dire national savings situation. 
 Labour’s policy which would look at introducing a universal KiwiSaver would create an enduring solution and lift our savings rate and raising our savings is desperately needed. My bill to raise the minimum wage which will come before the House would ensure that all workers could afford to pay for compulsory superannuation saving. So if we move towards that we have got to make sure that people are resourced to be able to afford to make those savings which will then benefit our economy over the longer term. 
In this legislation we also have clauses in Part 5 to do with software development. I will turn to Part 5. Here we see clauses to do with KiwiSaver and then further on in the legislation in clause 163 we have “Unsuccessful software development” and the treatment thereof and a tax exemption. Some of my colleagues have already been wondering aloud in debates on previous parts of the legislation—but that was not the time to have the debate—about how unsuccessful software development could occur in terms of the Inland Revenue Department which has a poor track record: $21 million was invested in a project to try to get the first of the reforms done within the Inland Revenue Department and a portion of that was written off because it was unsuccessful. Now we are told that this $1 billion or $1.5 billion rebuild of the Inland Revenue Department computer system is coming up. We do not have a time frame for it. We have a Prime Minister who says we should not be held to ransom by not having an effective tax collection system. Our current one was built in 1992. But we have had no progress and no confidence that this problem is really being addressed. John Key’s Valentine’s Day promise to look at our software system at the software for tax collection the computer system that the Inland Revenue Department has has not been realised. It is looking more and more like a promise in vain much like many of the other promises to grow our economy that Mr Key has made as leader. 
In and of itself this deduction for unsuccessful software development may encourage some businesses. I am not sure how this would affect say Mr Dotcom. He has come into the debate lately. He has had many successful as I understand it software developments in his time but were he to have an unsuccessful one I am not clear from my reading of the legislation—and perhaps the Minister would like to take a call on this—whether that would apply to him as a resident who is not a naturalised citizen of New Zealand. I invite the Minister to take a call on that in due course. I am sure other speakers will come to the issue of software development because it is a pertinent theme and one of the slightly larger aspects of the bill in the context of very much a tinkering approach to tax change. I am sure other people will come back to it. 
There is a further point if we go on to clause 170 if I may. Clause 170 talks about “Certain repairs to fishing boats” and the way in which the law applies to them in respect of the tax treatment. We have clause 170(1): “In section DO 2(1) ‘Part 4 of the Shipping and Seamen Act 1952’ is replaced by ‘Part 10 of the Maritime Transport Act 1994’.” There is some tidying up going on there but there are other questions that spring to mind. The provisions that apply to the repairs for fishing boats—how broad is that category? Do those provisions also apply to say cabbage boats? If someone had come down the river on the last cabbage boat and they needed repairs to their cabbage boat would these provisions in the law apply to that? Is a cabbage boat a fishing boat in this respect of the law? I think that is a legitimate question that the Minister in the chair might like to address because I am sure there will be people who might ask that question. They might claim they did not come down the river on the last cabbage boat but a lot of us suspect that they actually did. They may just not remember it I guess—that is the point—if their memory is failing about what boat they came down on about what river they were actually on when they were coming down and about whether there was a helicopter at the other end to meet them once they had come down the river on a cabbage boat to look at claiming for—