Clark David: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — In CommitteeText is incorporated into the Bound VolumeClark David: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — In Committee[Sitting date: 03 November 2015. Volume:709;Page:7658. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North): I want to speak in support of this bill but I also want to bring some words of caution. It is of course a bill that addresses many things and we will be supporting it precisely because it makes sure that our tax system is robust and we need a robust tax system in order to ensure that as a country we have income that pays for those assets that we need in common—things like roads and hospitals and schools. Across this Parliament of course we will find people who agree that we need those things. We might debate to what extent some of these things should be publicly or privately provided. We certainly on this side of the House think we need more investment focus in the area of things like schools and hospitals so that these things can be available and accessible to all citizens at affordable rates. Court houses are another example and roads certainly need to be maintained to a level where anybody can drive on them without requiring some kind of Hummer or four-wheel drive vehicle.These are the basics of a Western democracy and around the world people agree that common infrastructure is needed to fund those things that we individually could not purchase for ourselves. I certainly cannot afford to retain the world’s best oncologist at my beck and call. We all need to be able to access those people in our times of need and so the system provides for that. A robust tax system ensures that we have that income to afford those very things that we all need. So we support the maintenance of the tax system and this bill at its most basic is actually about ensuring that the tax system remains robust for another year. There are always loopholes in every tax system. There are changing patterns of investment. There are new laws that are brought into place that introduce the possibility of different workarounds or incentivise different behaviours in response to the tax system of the day.We however will have some challenges supporting parts of the bill because for example we know that the child support initiatives that we find in the bill will be very difficult to implement. We know that the department implementing them has been forced to come back to this House to amend legislation that has been put through before in respect of child support legislation because it was unable to implement it and that is because the Inland Revenue Department’s computer system is so out of date. It has not been repaired as recommended to the current Government. It has been neglected and we know now that a $1.5 billion price tag is expected to be attached to the department’s computer rebuild and that that has been on the go-slow for quite some time.So we are apprehensive about the Government’s ability to actually implement some of these changes and we are concerned that we spend time in a Parliament pushing through changes that cannot be backed up and that are going to require subsequent legislation in Parliament to correct them. That is unfortunate and speaks to a Government that has got its priorities wrong. The intention or the good words may be there but often the action is lacking. And that carries a cost to the taxpayer which I guess is the point that I am making and that is a lost investment if we make things that look good on the surface and then have to revisit them. It costs money to put bills through Parliament. All of the people sitting in Parliament today are paid and they have support staff who are also paid. That is proper and right but we should not duplicate our efforts when we could do something right once and get it right and that is the most efficient way of doing it.One of the other issues that we have with the bill is the acknowledgment that the existing tax rates will stay in place. I want to take us back to when they were implemented in 2010. This bill confirms the existing tax rates. When these tax rates were brought in in 2010 they gave a huge wealth shift to the wealthiest 1 percent of New Zealanders. There was a big tax break—40 percent of the value of the tax cuts brought in in 2010 went to the top 10 percent of earners. The bottom 20 percent of earners got just 2 percent of the cuts and they were swallowed up immediately in a GST increase that John Key had not signalled in advance. In fact many have called that a broken promise. That GST increase swallowed up any tax benefit that those lower-income earners got in those tax changes.It is since that time that we have seen a dramatic increase in inequalities in New Zealand. We have seen housing become the least affordable it has been in 60 years—in 60 years. We have seen people who work hard every day unable to afford to buy a house in Auckland and in fact now unable to aspire to own a house in Auckland. And this is as Kiwis and as New Zealanders. This is not the vision for New Zealand that we have where housing is so unaffordable that working people cannot even aspire to own a house. In these tax changes that were brought in a wedge was driven in that has grown that inequality and to afford these tax changes the Government has been borrowing year after year after year. It has now borrowed $100 billion this Government to afford to give the very wealthiest New Zealanders this big tax break.Tim Macindoe: Oh nonsense. You know that’s nonsense.Dr DAVID CLARK: I hear a member opposite say that is nonsense. I mean if they are not borrowing what are they doing? Why is that big liability sitting on the Government’s balance sheet? This Government has borrowed more money than Sir Robert Muldoon’s Government. It is the biggest-borrowing Government in New Zealand history and that means that every New Zealander born today carries a liability of thousands and thousands of dollars or the Government carries it on their behalf. They are mired in debt. Future generations will be paying back the debt borrowed by this Government to afford these tax changes that we are affirming in this bill today.We cannot not support the bill because we need a robust tax system but it is a bitter pill to swallow that we are supporting effectively the Government’s borrowing to afford tax cuts for the very wealthiest New Zealanders as a part of this package. Of course that is a cunning political presentation. It presents it all as one package because the Government does not want to be challenged on its prejudice for supporting the wealthiest 1 percent of New Zealanders at the expense of those in the middle. And let us not forget that it is those in the middle who are suffering the most. Those of course who are most hard-pressed those on the modest incomes often receive some child support from that wonderful tax package that the previous Labour Government put through—the Working for Families package which ensures that the hard-up are supported by the State. Those in the middle those ordinary kind of Kiwis who have some skills and are the tradespeople who work hard all their lives used to think that they could get ahead and today the prospects are far far far worse for them as a result of this wedge that has been driven between the wealthiest 1 percent and the rest of New Zealand who are supporting that wealthiest 1 percent in getting these tax cuts.As I have said just to sum up we will support the bill because we support a robust tax system and we support the changes necessary to achieve that. As a Labour Party we always believe in providing for that common infrastructure the decent and affordable schools access to good health care even though this Government has underfunded it. We support the robust tax system needed to provide at least some level of affordable health care and we support of course the infrastructure the courts the roads the rail—the necessary infrastructure to ensure that we have a functioning democracy that is safe and that provides for all of its citizens. But we are uncomfortable of course affirming those tax changes that mean that the very wealthiest 1 percent are supported whilst the rest of us and future generations are mired in millions and millions and billions of dollars of debt. Thank you.