Robertson Grant: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — Third ReadingText is incorporated into the Bound VolumeRobertson Grant: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — Third Reading[Sitting date: 16 February 2016. Volume:711;Page:9039. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): I have heard Hutt Valley High School referred to as “Sweet Valley High” but I am not sure about “Technology Valley”—is it Mr Bishop?Chris Bishop: That’s right.GRANT ROBERTSON: No you will need to go back to the marketing people on that one. I will give the Government this about this tax bill: at least when the Finance and Expenditure Committee looked into this bill and took submissions on this bill we did not have every large accounting firm in the country come to the committee and say that the bill does not make sense that they were professionally confused by the Government’s approach and that they did not understand how it fits together. This bill came throughto the committee at the same time as the Government’s legislation around property measures came through which was a fiasco. That was when it brought in its brightline test we had the whole thing about providing an IRD number and an address and submitter after submitter came and said: “This does not make any sense.”I will let the House and those watching in on a secret. There is a reason why this bill stands out from those other ones: this one has got nothing to do with the National Government. This bill comes from the officials at the Inland Revenue Department (IRD) who do a pretty good job to be honest in keeping the tax system running efficiently—picking up the loopholes picking up the contradictions in the tax law—and they brought in a pretty good bill in that context. But it is because it does not have the real paw prints of the National Government on it that it has actually come to us in a form where we can vote for it and pass it without those who work every day in the tax system being worried that they simply cannot understand what the Government is up to. And that is the tragedy of this from the Government. When it puts its own bright ideas into the tax system it turns into a shambles and that means that all we are left with are the mechanics of the system. As I say good on the IRD officials. I want to thank them for their role in supporting the select committee and Therese Turner the specialist expert adviser whom we have for the committee. They all did a great job in helping the committee work through the issues that are here.But it is just making the machine tick over—that is all the Government has managed here. It has got absolutely no vision for what role the tax system might play in helping New Zealanders build the Kiwi Dream and helping New Zealanders to get ahead and take the opportunities that are out there. Where is the vision from this Government when it comes to how the tax system can do that? All it has got for us is a mechanistic piece of legislation because it does not have the ideas that will help drive innovation and that will help New Zealanders get ahead take the opportunities and build the dreams that they have. So what we have got here in this bill is a piece of legislation that does four or five major things and all of them are a disappointment in one way or another.Firstly there is the setting of the annual rates for 2015-16 which as Mr Woodhouse and others have noted are the same annual rates that we have had. As my colleague Stuart Nash said all that does is entrench the inequalities that are in our system already. All that does is say to New Zealanders that the Government is bereft of ideas for how the tax system might contribute to perhaps reducing inequality. You know I think we would all respect the idea that the Government needs to pass legislation like this which makes the tax system tick over if at the same time it was out there having the discussion with New Zealanders about how the tax system could be made fairer and how we could actually look at the role of the tax system and not only income equality—which is obviously what the rates are about—but also asset and wealth inequality.You know time after time in the select committee we have had the Governor of the Reserve Bank come to us and talk to us about how worried he is about what is happening with asset prices in New Zealand. When we turn that into real life that is actually people lots of New Zealanders—lots of young New Zealanders—being shut out of that core element of what we thought it means to be a New Zealander which is the idea that you could own your own home. That is what we mean by asset inequality over here. When you have got homeownership rates at the lowest that they have been in 60 years that is snatching that dream away from a whole generation of New Zealanders. Where is the bill that says we are going to do something about that in this House? We do not see that from this Government; we see the tinkering. So we see the annual rates staying the same and lots of New Zealanders will be sitting around tonight following this bill closely and wondering whether or not this is the bill that will make sure that everyone pays their fair share in the tax system.Well I can tell them that I have waded through it and I have done the work there for New Zealanders—it is not. This is not the piece of legislation that is going to say that every New Zealander should pay their fair share. Where is the bit in here where the Government decides to crack down on tax evasion? I know that Simon Bridges is worried about this. He has got hard-working New Zealand companies in his electorate in Tauranga that pay their tax and do the right thing. Well stand up for them Mr Bridges. Stand up for them and say that those multinationals that hide their income that shelter away from their tax obligations—stand up for those New Zealand companies and come up with a plan that does that. Do not sit around on your chuff waiting for some international organisation to sort it out for you. Get up and support those companies that do pay their fair share.So we look at the Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill but there is no sign of that—no sign of any action to actually make sure that the tax system is a fair system where we actually collect the tax that is owed and we have a system that New Zealanders could say once and for all was fair. So the annual rates are set. They are not set the way that we would do them. My colleague Stuart Nash has made the point that there would not be anyone in this House who would not want to see taxes lowered for particularly those on low incomes in New Zealand but we cannot do that at the moment. We cannot do that at the moment because we do not have a system that treats New Zealanders fairly and too many people get away without paying their fair share.As others have said the other core element of this bill is around research and development. Chris Bishop has made the point that there are a couple of measures in here that will be helpful particularly for start-up tech companies and those right at the beginning—there is no doubt that that is true—and again I congratulate the officials on having come up with that. But it is hardly the comprehensive measure that we need to get research and development going. Every single member on the other side of the House knows that if they have been to Australia or if they have gone to countries in Europe a simple straightforward tax credit system for research and development operates there. We could have an intellectual debate about the best kind of system to make that happen but the truth for companies that are operating in New Zealand today is that they can look across the Tasman and they can see a research and development tax credit system that is easy and operable and they ask “Why not go and work in that system?” because New Zealand is failing to do that.I mentioned in my Committee stage speech going to the Lowe Corporation in the Hawke’s Bay with Stuart Nash and Andy Lowe saying to us “Whatever you do get that through.” because it gives the certainty to those companies that they can claim in our case—the policy the Labour Party has put forward—which is 15 percent for research and development tax expenditure. That means they know they can do it. Under this system we entrench the grant-based system—Steven Joyce picking winners and Chris Bishop going through his Rolodex deciding who is going to get that research and development grant. We can do so much better than that if we have a research and development tax credit system that is simple that is easier to use and that everybody can access.I just want to end on the question around child support and the simplification of the administration of the child support scheme that is lauded and claimed in this bill. The truth is what this bill does is it puts in place some of the mechanisms that are required to implement a $130 million blowout. That is actually what it does. In fact it is more than $130 million. It is more like about $160 million more than what was originally forecast. This was incredibly poor planning by the Government. It went against the advice of Treasury the State Services Commission and the Government Chief Information Officer who all said “taihoa; wait until the overall IT transformation package has been put in place”. But instead the Government has thrown bad money after bad money and created a situation in which the child support IT system has now had all this money chucked at it. I have no doubt that at some point the Government will come back and say it does not quite match with the new IT system. More money will need to go in.The child support system changes themselves have had difficulty bedding in. I will not be the only MP in this House who has had people come to me with concerns about how that has happened. It is a difficult area. We want to ensure that people meet their obligations but we have to make sure that people are treated fairly and ongoing cases indicate that the system the Government has put in place is very very creepy.It is a missed opportunity. The Government could have put forward a tax bill that actually made the tax system fair made it part of supporting innovation and made it part of supporting a financial system that New Zealanders could be proud of. It has missed that opportunity as it has so often before.