Nash Stuart: Taxation (GST and Remedial Matters) Bill — First Reading 
Text is incorporated into the Bound Volume 
Nash Stuart: Taxation (GST and Remedial Matters) Bill — First Reading 
[Sitting date: 18 August 2010. Volume:665;Page:13278. Text is incorporated into the Bound Volume.] 
STUART NASH (Labour) 
: 
 I rise to support the Taxation (GST and Remedial Matters) Bill in its first reading and I wish to talk about two things tonight. The first thing that I wish to talk about is what an absolute shambles the whole introduction of the GST increase is turning out to be. The second thing is what a legislative necessity this bill is. 
This bill contains a whole raft of amendments which the Minister has highlighted. It involves changes to Acts ranging from the Income Tax Act 2007 right through to the Local Government (Auckland Transitional Provisions) Act 2010. So it is wide ranging in its scope and reach and its amendments are part of the ongoing process of improving legislative integrity. But one cannot go past any GST bill without commenting on the absolute shambles that the whole implementation of the GST increase is turning out to be. It is quite frankly a disgrace. 
Tonight I was listening to the member for Whanganui Chester Borrows speak. That seat will be taken by Labour’s Hamish McDouall at the next election. When Chester Borrows stood up his first comment was along the lines that it was great to be able to stand up and implement policies that the Government had campaigned on. Then he finished his speech by saying he is proud to be part of a Government that does what it promises to do. Chester Borrows is a good man. He will be a list MP next time and he is a man with a conscience. But Chester Borrows is also part of a Government that is implementing a policy that the National leader promised not to implement. I bet that he feels mighty uncomfortable about that as do many of his colleagues. 
It all started when the previous Leader of the Opposition one Mr John Key stood up in front of the nation and laid the fears of ordinary New Zealanders to rest as they were sitting in their living rooms. He said to them that National would not raise GST if he became the Prime Minister. In fact in answer to a specific question from a reporter who asked whether Mr Key could rule out raising GST to 15 percent Mr Key replied that National would not be raising GST. Mr Key looked into the camera and said National would not be raising GST. There was no ambiguity in that statement; there was no hidden meaning and no doublespeak. It was just plain English: National would not raise the rate of GST. How dare Mr Borrows stand up here and say he is proud to be part of a Government that is implementing policies that it campaigned on? I wonder how proud he is to be part of a Government that is implementing policies that it said it would not campaign on. 
Well Mr Key did raise the rate of GST. The implementation of this increase has been a bloody disaster. We are still 6 weeks away from this implementation. On 10 August a large accountancy firm Ernst and Young threw up its hands in frustration and in a press release stated “As we face the harsh reality of the 1 October GST increase to 15 percent many are realising this is not a modest increase and the issues are actually more complex than anyone first imagined.” Ernst and Young is a large private accountancy company and would normally welcome any new tax measure as it creates work and generates fees. However this time even Ernst and Young are finding that all the changes to GST are totally ill-conceived very poorly planned and very poorly communicated. I have heard stories that Inland Revenue Department staff are reaching the point of revolt as they just do not have the information at hand to answer questions arising from this whole process. 
What will the cost of this process be? Every small company that runs the accounting package Mind Your Own Business currently known as MYOB will pay $229 plus GST for its accounting upgrade and $269 plus GST for its payroll upgrade. That is $498 plus GST for every small business in this country. My advice to MYOB users is to purchase the upgrades before 1 October because they will save themselves $12.45 in GST. Of course not every small business runs MYOB. But this is a pretty standard off-the-shelf accounting package. So let us hypothesise here; let us say around 100000 small to medium sized enterprises use some form of accounting package. That is a cost of around $50 million being taken out of the New Zealand economy. We can thank Mr Dunne for that. In fact I think it is pretty fair to say—and we have our deputy party leader here—to Mr Dunne that he will not be the Minister for Revenue in 18 months’ time in the sixth Labour Government like he was in the fifth Labour Government. I think it is pretty safe to say Charles Chauvel will ensure that Mr Dunne is in fact no longer an MP. 
There is a second point I would like to make which is about the legislative necessity of this particular remedial matters bill. By definition remedial matters bills are supported because they play an important role in tidying up legislation and closing down holes or gaps that people may be exploiting. That is certainly the case with this bill. I must admit though that when I saw another tax bill on the Order Paper I wondered about what kind of pain Mr Dunne was planning to inflict on New Zealanders. I wondered about what dreaded scheme Mr Key and Mr English had concocted to take more money from the majority of hard-working New Zealanders. Then I remembered that this Government does not have a plan. I have not seen any plan for growing the economy for creating jobs and for providing for a long-term sustainable future for New Zealanders. In fact I am still waiting for a plan from the “Hollow Man”. 
The headline provision of this bill is that it requires GST-registered vendors to charge subject to certain conditions GST at the rate of zero percent on any supply to a registered person involving land or in which land is a component. This measure is intended to prevent phoenix fraud schemes that involve the Inland Revenue Department refunding GST to the purchaser with no corresponding payment being made by the vendor because the supply company deliberately winds up before making a payment. Basically it closes down a fraud and gets rid of a scheme that people are using to rip off you and me—the taxpayers who work incredibly hard and who pay their share. I will get a little technical now. However this is most important because I want to run through very briefly some of the changes that this bill may give effect to. These changes may not affect many people but those who are affected need to understand that the law will tighten up around these areas. That is an important part of this bill. The House should be aware that if the bill gets support for its first reading—and there is no reason to assume that it will not because as I mentioned Labour is supporting it—then everything that we have spoken about will go through the select committee process and be open to submissions unlike the increase in GST that went through the House in May of this year. 
We are talking about the sharing of KiwiSaver information the on-premises fringe benefit tax exemption joint bank accounts the application of overseas donee status to certain charities the treatment of superannuation funds administered by the National Provident Fund Auckland City Council restructuring and the taxation treatment of emissions trading units. People will have a chance to make submissions to the select committee on all that sort of technical stuff. 
To sum up I spoke broadly on two key things. The first one is that this is an important bill because it makes a series of changes that are necessary to preserve the integrity of the taxation system to close loopholes and to make changes that are necessary as the regulatory environment changes. This bill is likely to go through to a select committee so that the people of New Zealand can have their say and exercise their democratic right on it. They can make submissions speak to their ideas and challenge the process unlike the tax bill that increased the rate of GST to 15 percent. New Zealanders had no say on that and that was my second point. New Zealanders had no say in that matter. In fact it was even worse than that. New Zealanders were told by Mr Key that National would not raise GST but it did. That is not democratic. He did not take it to the electorate which Chester Borrows is so proud of saying the National Government does. Mr Key sideswiped the democratic process. He told the people of New Zealand something that he went back on. He flip-flopped. 
There is no plan no strategy and not even any milestone—just gallstones. They are very painful and are impossible to pass without urgency. Thank you.