Watts SimonHon SIMON WATTS (Minister of Revenue): Well thank you very much Madam Speaker. And I wish to acknowledge Rawiri Waititi for that very energetic introduction there. I think what he was indicating there is he might be wanting to join the parliamentary rugby team and we're going to run it up the middle. As his co-captain I welcome him to that team at any point. But as I said to the member as I came in and I acknowledged—and I won't leave the House in any more suspense for any longer but as the Prime Minister acknowledged in his comments at question time today National will not be supporting this member's bill today and I acknowledge that.But look before I delve into why National will not be supporting this member's bill I want to extend my congratulations to the member for getting this bill drawn in the ballot. The primary reason why National will not be supporting this bill is because of the staggering fiscal cost that this change will incur. Rawiri Waititi: Oh the administration—I knew you were going to say that.Hon SIMON WATTS: And the member's saying he knew that's why I would do it. He is relatively psychic and I acknowledge that. But the cost of $2.6 billion is a figure that cannot be overlooked. Over the last year there has been a considerable amount of commentary I think across the House in regards to this bill so what I'm saying comes as no surprise for those that have been watching this. But the issue around the fact of GST on food—and in particular fruit and vegetables as was noted by the Labour Party—has also been covered extensively by the Labour Party's Tax Working Group back in the day as well. So we know that this analysis has already been done. And not often does a National Party member refer much to the Labour Party's Tax Working Group but today is the day that maybe we will. And I will cover some of that.So estimates within the work that was undertaken by the Tax Working Group indicated that the total value of this change could give an additional $53 to some of the most wealthy households per week as a result of this change and about $14.50 for our lowest-income households. So let's unpack that aspect. Let's start with the first point which is in regards to the Tax Working Group indicating that that spending and that amount of money would mean in effect a cash transfer of around $29 for every household per week; far more than the lowest income families would get from this policy that the member is representing. And I note for the House that these numbers are from 2018 before obviously a significant implication in regards to the inflation that has flown over the prior periods. But let's take that aside.The goal merely from this policy as the member quite rightly indicated is in order to maximise that transfer of money back to the back pocket of those with low income predominantly and it is just simply not an efficient mechanism in order to do that. The claim that this is a progressive policy that will deliver most of its value to low-income households simply is not correct. It is not the reality. It is unavoidable because the nature of GST as we know is that GST is paid in terms of those that spend it and it will benefit those who spend more on food than those that don't. The truth is that this policy benefits a number of those people who were going to spend more on food and will not necessarily bring the benefits to those on lowest income.It's also based on the assumption that all of this benefit will be passed on to consumers. And we know from analysis in the debate actually that the Labour Party had in regards to a similar promise that they made leading into the election that the real question is how much of this GST reduction will actually flow through to consumers. It's sadly the case that one of the biggest beneficiaries of this policy that the member is proposing will actually be the supermarkets chains themselves not the low-income families. And that's why we are not supporting this bill.Rawiri Waititi: That's rubbish.Hon SIMON WATTS: And the member's saying that's absolutely rubbish. I can hear the member saying rubbish". It's not rubbish—it's not rubbish. It is facts—it is facts. And I'm running it down the middle there for the member and I'll pass it to the member as well.But we'll keep going because we've got five minutes to go and I'm enjoying this opportunity to do a little bit more talking on GST which is a great topic to be talking about as we lead into the main event at 5.30 p.m. in only 14 minutes. And I can feel the crowd building not only for this GST speech but for the main event. So let's get back to the topic. The other issue with this is that the more exemptions that you place in terms of GST the more complexity there is that comes into the system. And New Zealand has a very good system in regards to GST unlike our cousins across the Tasman in Australia who have exemptions for everything. In New Zealand actually we have a very simplistic model and very few exemptions.Rawiri Waititi: We follow them into war. We don't follow them in the example of no GST on food.Hon SIMON WATTS: And I'm loving the participation of the member in terms of the commentary that I'm providing but the reality is as it stands our system has very few exemptions meaning that the flat rate of GST that flows through on most goods and services means that it is a system that is easy to apply and it is easy to predict and that's important as well. For businesses it makes it easy for them to do what they need to do. And if we apply what the member's proposing that's going to make it more complex and that is not the outcome we want. I obviously congratulate the member for putting this bill in. It's a little bit simpler than what the Labour Party were proposing prior to the election so I acknowledge the work and effort that's gone into the simplification of that. But that's pretty much where I'll draw the line—it's where I'll draw the line—in terms of that because there's a lot of complexity that comes in between fruit and vegetables and other food items and the problem is as we know in these types of conversations the devil's always in the detail isn't it? The devil's always in the detail. And when we start getting into the definition of food that's when the complexities are going to arise and we can't have any of that. We're a Government of simplicity and we want efficiency in regards to that so we're not going to be up for that. And we don't believe that this is going to do what we need to do. So don't worry about that. We think that GST should apply flatly across all goods and services and I think that is the most appropriate way that we want to do that.In regards to other aspects of this we think that in the points that I've raise that it will apply to any of the changes and we need to also think about the broader context around this bill. We're also aware that this will make our system more complex and we have noted that pretty clearly.So look I'm not going to continue on too much longer. I know we've got a little bit more time to kill this evening before 5.30 p.m. but National will not be—[Interruption]ASSISTANT SPEAKER (Maureen Pugh): I'm sorry to interrupt the member and I do welcome all our visitors to the gallery and thank you for being here. But the House needs to continue its business until the valedictory that you're here for. And I just respectfully ask that you do it in silence. Thank you.Hon SIMON WATTS: Oh thank you Madam Speaker. I'm sure they were no doubt wanting to listen to the conclusion of this GST speech before that. But National sadly will not be supporting this bill. Instead we will be focusing on more policies of substance that will lower the cost of living for hard-working Kiwis across this country like focusing the Reserve Bank on a single mandate or maybe removing the Auckland fuel tax could be a good option that we might do or delivering real tax reductions for hard-working Kiwi families. And we'll be talking about more of that soon for the member as well.So when it comes to tax we'll be focusing on making the system much more straightforward much more simple rather than making it more complicated. On that basis sadly I will not be commending this bill to the House."