Burns Brendon: Taxation (Business Tax Measures) Bill — Third Reading 
Burns Brendon: Taxation (Business Tax Measures) Bill — Third Reading 
[Volume:653;Page:2168] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 The previous speaker made much of a focus on the deficit; he is the one with the deficit. He may have done fifth-form maths but he cannot recall much of it. He should remember—because he was a member of this House at the time—that National voted against the previous Labour Government’s move to cut business tax rates to 30 percent. Does he remember that? Does he remember that National was in favour of cutting the research and development tax incentives that the past Government had put in place and has in fact cut them? Does he remember that this National Government has made cuts to KiwiSaver and that it is axing three-quarters of a billion dollars of tax cuts that would have favoured those most in need of that sort of assistance during this very difficult economic time? 
 [ 
Interruption 
] That is right. Give it to the rich. Let them pay it back to the poor by way of a charity if they are lucky. That is the philosophy of members opposite. 
We are on the third reading of the Taxation (Business Tax Measures) Bill and I note that the chair of the Finance and Expenditure Committee Craig Foss did a good job of taking the bill through the select committee. But he also said before that this is the first piece of legislation that has been passed through all its stages in this Parliament without urgency and by going through the select committee process. Although it is an important bill it is nevertheless a very small bill and a very small part of what needs to happen in this nation in order to meet the demands of the international situation. Speakers opposite have been making much of the fact that this bill is part of the Government’s rolling maul of measures to deal with this one-in-100-year turn round in economic circumstances. Although this bill is an important step forward to assist New Zealand businesses it still remains a relatively small step. 
Rather than this bill being something that this Government can trumpet as having done in response to the world’s worst economic outlook in living memory I say this bill was originated by the previous Government. The Minister yesterday suggested that a lot of new measures are now included in the bill that the Government inherited. That is true but the Inland Revenue Department provided the Finance and Expenditure Committee with a 1-page summary of the bill’s new measures the enhancements of measures inherited from Labour and the inherited measures that remain unchanged in the bill. There are four new measures three enhanced measures and five original measures remain unchanged. So there are four new measures within the bill and eight enhanced or existing measures inherited from the previous Labour Government. The House can see the substantial contribution that Labour made to this bill from the previous Government’s measures. 
The new administration can barely claim the credit for this legislation being part of the rolling maul as some members opposite continue to suggest. It is barely another pair of boots added to a rolling maul. But whatever the bill does provide it is not and cannot be described as a deliberate focused planned and prioritised response to the global meltdown. Not only has Labour provided the basis of the bill but we also saw some amendments in the name of the Hon David Cunliffe to further improve this Labour-initiated bill. 
Let us go through the bill as it was inherited by National and the enhanced or new measures it now includes. The new measures include a reduction in the provisional tax uplift rate from 105 and 110 percent to 100 and 105 percent to apply from 1 April this year. The increase in the GST payments basis threshold from $1.3 million to $2 million is also to apply from 1 April. The introduction of a new threshold of $10000 below which all business-related legal expenditure is fully deductible is also to apply in the next income year. There is an increase in the thresholds under which the fringe benefit tax is not required to be accounted for regarding minor benefits provided to employees. Those are the new measures within this legislation. 
The existing measures with some enhancement include the increased pay-as-you-earn once a month filing and payment threshold. That has gone up considerably as from 1 April of this year. There is an increase in the fringe benefit annual filing threshold from $100000 to $500000 and that also applies from next month. There is an increase in the GST registration threshold. 
The existing measures that were kept in toto from the Labour Government’s legislation include the increase in the low-value trading stock threshold an existing measure relating to accounting financial arrangements the extension to the fringe benefit tax annual filing the increase in the provisional tax use of money the use-of-money interest safe harbour threshold and the increase in the GST 6-monthly filing threshold. 
Labour of course is also urging that we make some further changes to the bill around further reductions in the use-of-money interest rates and in the tax deductibility of patent costs—a good submission in that respect came from the Manufacturers and Exporters Association—and around reducing the uplift basis for provisional tax. Even if those measures were included this bill would still effectively represent business as usual. It is a good bill but it does present a missed opportunity in the face of the global meltdown. The economic conditions have deteriorated rapidly. Most commentators are predicting considerable drops in GDP and we have to ask why the Prime Minister remains the only person who has a sunny day forecast in the face of what really needs a considerable response and plan. The plan that we have seen so far includes the cycleway to nowhere. It started with a costing of $50 million and now looks more likely to cost $300 million if it proceeds. The 9-day fortnight which is now going to assist employers is welcome assistance but 60 jobs at Fisher and Paykel Appliances are a long way short of the 100000 jobs that were suggested. 
The Government has some other byplays going on. On the new  
Q+A 
 programme on Television New Zealand on Sunday Therese Arseneau a fine political scientist from Christchurch said that very clearly there was not much of a plan—that this is not an ordinary recession and there is no action plan to maximise our competitive advantage. Of course the  
Q+A 
 programme itself may not survive much longer now that the Government is axing the Television New Zealand charter. The National Government of course has also scrapped the research and development tax credit gutted KiwiSaver and discarded the Fast Forward fund and in the meantime we are getting this modest tax-amending bill. 
We as a party urge the Government to give some serious reconsideration in the face of the economic crisis that we are facing—and those words are not too strong—to retargeting the tax cuts. They simply are not the best way to stimulate our faltering economy. We must make the very best of tax cuts that are focused on those truly in need. People at the bottom end of the spectrum are the ones who spend every dollar they get. People who have discretionary income have a choice: they may save they may spend off debt they may take a holiday and they may purchase goods. Those at the bottom end of the spectrum have no such choice. It was shameful to see that the tax cuts provided under the Labour Government’s programme where three-quarters of a billion dollars were to have gone to the New Zealanders who are most in need have been forgone in the interests of providing tax cuts which the Prime Minister now suggests may be given back in charity payments to the poor of this country. This is going back to Dickensian times in the thinking of the Prime Minister. 
National in its approach to the economic recession is uniquely seen on the international environment as tinkering with our economy while the rest of the world does some real things. 
 The International Monetary Fund is in town at the moment and it is telling the Government not to take a knife to spending at this time. It is counter-cyclical to what the Government needs to achieve. Any New Zealander who looks across the Tasman to Australia can see that there is a NZ$67 billion stimulus package in Australia. So where is the National Government’s package for New Zealand? We have this bill progressing through Parliament. 
This is a small important and modest piece of legislation and it is welcome. It will provide a small measure of relief to small to medium sized enterprises which provide 90 percent of the jobs in our nation. Labour supports the passage of this bill but we do so while suggesting the bill needs some amendments and we have indicated those amendments to the House. We would like to see reductions in the use-of-money interest rate. We would like to see further work done around the issue of patent costs. We would like to see reductions in the uplift basis. If this bill had the Labour amendments added it would be more useful. But it remains a modest bill. It is no answer to the scale of the recession that this nation and this world face.