Clark David: Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill — In CommitteeText is incorporated into the Bound VolumeClark David: Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill — In Committee[Sitting date: 18 February 2014. Volume:696;Page:16017. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North): I am first to express my disappointment that the Minister in the chair the Minister of Revenue did not rise to apologise to the families in New Zealand and the 210000 children affected by the delays in Part 3 of the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill. He is a member who often will acknowledge when he has made a mistake but on this occasion he seems unwilling to do that. He seems unwilling to outline a plan for when we will have a computer system in place that will be able to effect in a timely manner without wasting parliamentary time and without wasting the time of ordinary New Zealanders changes that make our tax system fairer and more efficient and effective for growing our economy.I come to the title and commencement clauses. I think that this bill has a very innocuous-sounding name. It is the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill. In my view it ought to have a livelier name because I think that would draw ordinary New Zealanders’ attention to just what we are doing here. It is actually quite a significant bill that we are passing through this House. I am looking forward to some contributions in this final debate in the Committee stage from the members opposite—the current chair of the Finance and Expenditure Committee Mr Goldsmith one of his perhaps more erudite contributions would be welcome; and also Mr Ross opposite who often opines on such matters; as well as contributions from my colleague Mr Little and others; and Mr Mallard who I am sure will have something to say about the innocuous-sounding name of this bill and the effect that it will have across New Zealand.In the annual rates section of this bill we are reaffirming the income tax rates that were set down in 2010 in the so-called tax swindle—named politically neutrally as a tax switch—that this Government put into place where 44 percent of the value of the tax cuts went to the wealthiest 10 percent of New Zealanders and the bottom 20 percent got just 2 percent of the value.Paul Goldsmith: Distributionally neutral.Dr DAVID CLARK: Mr Goldsmith says that it was distributionally neutral. I do not think that even Mr Goldsmith believes that judging by the smirk on his face because even though he may represent Epsom I am certain that he knows of people who are struggling and who were impacted on by the GST change that happened at the same time—the GST change that the Prime Minister said he would not make and then made—which harmed New Zealanders at the bottom who spend most of their income on consumption. He knows that those 2010 tax changes have disproportionately affected middle New Zealand and middle New Zealand is struggling. It sees a Government that is out of touch and that is not listening to its concerns any more a Government that was once aspirational for New Zealanders but now seems to have let go in favour of simply transferring money to the most wealthy.We are being asked in this bill to reaffirm the income tax rates. Of course we must do that as a Parliament but we on this side of the Chamber do that part of it very begrudgingly because we do not see any offsetting plan for growth in our economy and we do not see any fairer tax system coming in in terms of the kind of pro-growth tax reform that we on this side of the Chamber would like to see in the shape of a capital gains tax which would shift money from the speculative sector into the productive sector creating more jobs for New Zealanders and creating a wealthier economy that is able to distribute that wealth fairly rather than just sending it all to the top. We knowthat we have the biggest gap between rich and poor in New Zealand that we have ever had.So I would like to see “Annual Rates” in the title renamed. “Taxation (Annual Rates” which is the first part of it—I am going to come to each part in my contribution—I think should say “Taxation (Affirming the Imbalanced Tax Changes of 2010 Without Any Compensatory Measure” and then I will come to my comma and talk about the next part which is “Foreign Superannuation”. I am quite happy for that part of the title to stand because I think the bill does address foreign superannuation. That part of the title is fair. But when we come to “Remedial Matters)” this touches on Part 3 of the bill which we have just debated where we see—Hon Trevor Mallard: We hardly debated it.Dr DAVID CLARK: But only just because the Government did not respond to questions placed on that part of the bill as to why—well I expect an apology actually from Mr McClay for the changes affecting 210000 New Zealand children that were announced just before Christmas. But I would like to see “Embarrassing Back-down)” replace “and Remedial Matters)” because the embarrassing back-down that is represented in the final part of the bill is not only embarrassing for the Government but has a widespread impact on New Zealanders. So as I said at the beginning of my contribution I am wanting to see a livelier title one that is actually more descriptive of the kinds of changes we see in the bill.The embarrassing back-down of course is particularly embarrassing because it goes against what the Prime Minister signalled. I will take those members of the House who have just arrived and are back in their seats who have been having perhaps some useful conversations in the foyer and those people who are watching at home and who have just switched on the television back to Mr Key’s words 2 years ago on Valentine’s Day. The Prime Minister said that tax policy was being held back because of computer systems and “cannot actually support radical changes from Government”. He also said: “You don’t want to be in a position where Parliament is held hostage to a lack of technology.” and that is the embarrassing situation we are in today. We are being asked to back out of legislation affecting 210000 New Zealand kids and their wider families who are already being put in the situation where they are having to share money around in a way that they may not all be entirely comfortable with they are having to share time with their children and they are having to reach arrangements in an uncomfortable situation and Mr McClay is telling them that now they are settled in to making these changes they have got to change them again and go back to where they were before. They will probably seek new financial advice because in the meantime they may have arranged their affairs anticipating these changes and then later on they will have to change them once again when the law actually comes into effect—impacting on them in some cases in 2016.I am sure that this is an embarrassment to Mr McClay. I do hope he has the decency to make an apology in this part of the debate. More important though I would also like to see him outline a credible plan for fixing the Inland Revenue Department’s computer system; $50 million spent on an in principle agreement that the tax system needs fixing is really not music to New Zealanders’ ears. The Minister of Revenue in the incoming National Government was told 5 years ago that the 1992 computer software might need updating. It was not rocket science but it was a pretty clear message in the briefing to the incoming Minister: the computer system needs updating. This Government has sat on its hands because tax reform in the interests of growing the New Zealand economy and creating a fairer tax system just has not been a priority. The Government has been more interested in entrenching wealth that is already there by giving tax breaks to the wealthiest. It is happy it seems to let small business in New Zealand suffer and happyit seems to let middle New Zealand—those who work hard every day and pay income tax on every dollar they earn—suffer.The Government has not been interested in implementing a capital gains tax. We know this because it would have needed to repair update and complete a change in the computer system in order to implement a capital gains tax which would generate that growth in our economy and would be able to cope with the kinds of changes that would not only enable growth but create a fairer tax system for all of us—the kind of tax system that sees money go from the speculative sector into the productive sector creating jobs for New Zealanders—Paul Goldsmith: What’s this got to do with it?Dr DAVID CLARK: —and creating a future that we would like to sign up to. Mr Goldsmith asks what this has got to do with it. That really is an indictment on his contribution to the debate today which has been very limited. These are the kinds of points that illustrate the need for a more informative title for the bill Mr Goldsmith because these are the effects on ordinary New Zealanders of the legislation that we are passing today. It reaffirms the annual rates; the changes—the tax swindle—where the GST took away any gains for most New Zealanders and only the very top were better off; the foreign superannuation changes; and the embarrassing back-down. These are the changes that we are debating here in this bill and the title of the bill if it were more accurate might alert more New Zealanders to the kind of Government that we have.It is the kind of Government that has created the biggest gap between rich and poor in New Zealand’s recorded history—the gap that sees middle New Zealand struggling to get ahead. It sees those New Zealanders who go out and work day after day and who try to save but without decent savings policies without pro-growth tax reform and without the kinds of research and development tax credits that would support our business sector and so on struggling to get ahead. These people want to see some vision from the Government. They do not just want to see $50 million thrown at international consultants to tell them what they already know. That is an outrage. Mr Key really needs to talk to his Minister and ask him to set out a credible plan because Mr Key is swimming here. Two years on his concerns have not been addressed.