Robertson Grant: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — In CommitteeText is incorporated into the Bound VolumeRobertson Grant: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — In Committee[Sitting date: 03 November 2015. Volume:709;Page:7649. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): I am pleased to take the first call of what I am sure will be many on the Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill. As the title of the bill as exciting and interesting as it sounds indicates the bill covers a wide range of topics. Part 1 which you Mr Chair have called us on deals with the matter of child support payments.It is important when we look into this part that we know what the context of this is and it is very well covered I might say in the regulatory impact statement for this particular piece of legislation. I want to cover in my first contribution on this part the background as to why these amendments have been put up and then I want to look at three particular areas that the Minister and the Finance and Expenditure Committee have both looked at and recommended some amendments to. They are around the question of relief from payment the question of the timing of the implementation of various parts of this part and the changes around sole parent students.Before I do that though I do think it is important to understand the context of these changes. There will not be many members of Parliament either in their role as MPs or as individuals who have not had issues raised with them about child support payments. It is a regular topic. I can see Mr Barclay nodding; in his various constituency offices across the lower half of the South Island he will have had people come into his offices with concerns about aspects of child support payments. Certainly nobody on this side of the Committee I am sure will be saying that the child support payment regime is perfect. It does need change and the review that was undertaken that built up to this legislation was needed and timely.Generally speaking I would characterise the issues and complaints that have come to MPs or that have been raised in public as being in the category of those who are the paying parents feeling that they are unfairly contributing and that they are contributing above and beyond what they should be relative to the amount of time they spend caring for children and those on the receiving end being concerned about the level of payment that they are receiving and the times and occasions when people do not make the payments that they should make.It is worth noting that there is around $3 billion worth of child support debt at the moment in New Zealand; 75 percent of that debt is actually in penalties and a big chunk of those penalties are of more than a year’s owing. So that represents clearly a system that has not been working properly if you just look at it in terms of the amount of money that has been paid over and the number of people who are failing to meet their obligations. So as I say there was absolutely no doubt in my mind that the review around these issues was timely.Where concerns were raised with me and where I think the Minister in the chair may care to take a call to help explain whether or not this legislation will deal with these problems was in the process of change. So what we have got is that everything is out of kilter in terms of dates because of the complete disorganisation of the Leader of the House failing to get legislation flowing through this House in order to meet time lines—Hon Clayton Cosgrove: Really?GRANT ROBERTSON: I know you will be surprised by that Mr Cosgrove—failing to meet time lines that have been set. Most of the reform package has actually been in operation since 1 April this year and we are now today in the Committee passing the legislation to try to make that work.There are other elements of the legislation that come into force on 1 April 2016 and that is a timely intervention but a big chunk of the reforms have already been implemented. I will give the example of a case that came to me in my electorate office where the change in criteria the change in process for child support payments led to a situation where there was a rebalancing of who was paying in a relationship and I believe on balance that was a fairer rebalancing. We had a person who had traditionally been the total payer to somebody becoming only a part payer and the person who had previously been receiving taking more responsibility. It was a complicated situation. Each of the parents had new partners and that then led to other considerations that came into play there.But that particular person who came to see me in my office came because as part of this new process—she had a protection order against her former partner—her former partner was now in possession of all of her income details because that was part of the new process. And she said to me: “How can one part of the State want to protect me from my partner but the other part hand over my income details to that person?”. That is a system that still needs work. And there have been others who have come in with very strange calculations based on the new criteria.So I think it would be useful to the Committee for a member of the Government to get up and talk about what lies behind these changes and whether they are satisfied that we now have a fairer system because I am not yet certain of that. What I can say and what the Finance and Expenditure Committee considered were some changes that I think are useful and here I would like to refer to new clauses 44A to 44D proposed to be inserted into the Child Support Act. This means that the regime around penalty payments now includes the ability for the Commissioner of Inland Revenue to consider a wider set of measures as to whether or not there should be write-offs. This is a good thing because up to now it has effectively been a question of the efficient use of resources as opposed to the position that a parent finds themselves in or more important what that means for the child in this case.So clause 44A now includes the idea of whether the recovery of incremental penalties would place the liable person in serious hardship. That is actually an important factor to be able to put into play. It will I hope—if it is implemented properly—actually mean a more realistic assessment of the penalties. As I mentioned before 75 percent of the $3 billion child support debt in New Zealand is made up of penalties and hopefully this will actually create a more reasonable place. So I think under new clauses 44A to 44D we can say that that is a useful thing.But I want to in the remaining part of this call just come back to the wider context of these child support changes. We are talking about—and the Committee has been told that we are now talking about—approaching $200 million to implement these changes. The original costing was $30 million. Remarkably the Inland Revenue Department did not consider that there might be a capital cost with these changes. The department thought it would all be operational and then it realised it was actually fundamentally changing the system and it actually needed to budget for capital and it blew out. It actually blew out to $200 million. It has done some phasing a little bit of jiggery-pokery and it is back to $163 million but that is still a massive massive blowout. And let us bear in mind that Treasury and the State Services Commission said to the Government: “You should align these child support changes with the overall business transformation programme at the Inland Revenue Department.”—a nearly $2 billion programme I suspect by the time that actually comes into place.Hon Clayton Cosgrove: And counting.GRANT ROBERTSON: And it will continue to rise—that is right Mr Cosgrove. What we have not seen from the Government is a realistic assessment of whether or not these child support changes should have been put through at this time or whether they should have been aligned with the overall business transformation programme and I think it is incumbent on the Government to get up in this Chamber and tell New Zealanders why it has overseen a massive blowout of over $100 million in the cost of these child support changes that are being implemented in Part 1 of this bill. That is actually poor government it is inefficient and it is a waste of money at the same time that the system itself is still creaking along. Make the changes—by all means let us improve this part of the system; everybody in New Zealand can see that it is not working properly—but do not do that in a rushed way to look good and then have a massive expenditure blowout.It is hugely disappointing when the Government has its advisers from Treasury and the State Services Commission who are supposed to provide it with the advice about good government and about efficient government and what it actually ends up doing is to say: “No we’re going to ignore that for political reasons. The blowout has happened under our watch. We want to make sure it doesn’t look as bad as that. We’ll phase the expenditure with a bit of creative accounting.” But actually in reality the child support system is struggling and the taxpayer is going to find themselves severely out of pocket as a result.So I would like some Government members to get on their feet and address those two issues: have we now got child support right—