Goldsmith PaulHon PAUL GOLDSMITH (National): I stand to speak here on the Taxation (Annual Rates for 2018-19 Modernising Tax Administration and Remedial Matters) Bill. On this side of the House we agree with many of the provisions in this bill. In fact most of them were started by the previous National Government and were part of a long process of tax development. However we will not vote for this bill for a simple reason and that is that it is fundamentally an annual rates bill. It sets the taxation rates and those taxation rates are the same as they were last year and they weren't the rates that would have been in place if this Government hadn't taken away the modest tax cuts that the previous National Government had enshrined in law prior to the Government.So what we have in this bill: it outlines that there are four tax rates for personal income tax—it's worth reminding New Zealanders of that. So for the first $14000 an individual earns they're paying 10.5 percent tax rate; from $14000 to $48000 they're paying 17.5 percent; from $48000 to $70000 they're paying 30 percent; and above $70000 they're paying 33 percent. Now if it weren't for this Government's changes post the election we would have been paying different rates by now. We would have adjusted those rates for inflation over the past few years. It would have been from zero to $22000 that paid 10.5 percent; $22000 to $52000 that paid 17.5 percent; and then the upper rate wasn't changed. So the net effect of that would've been that anybody that earnt $52000 or more would have kept in their hands more than $1000 a year extra. That was all taken away by this Government and we will not support this bill on the basis of that change.It was a modest adjustment cancelled by this Government on the basis that it was too generous to higher-income families—they didn't need the money apparently. But I suppose the thing that makes people scratch their heads in New Zealand is the incoherent nature of this Government because the day after they took away those modest tax cuts because too much money was going to wealthier families they then gave those very same wealthier families access to $6000 or $7000 worth of free tertiary education. So I couldn't understand the logic behind that necessarily. And they've done a whole lot of other universal handouts at the same time. So they oppose tax cuts—they don't like leaving more money in the hands of New Zealanders but they're happy to give them much larger sums for free tertiary education.So it's incoherent but it's also unbalanced because we were at a stage when the books had been managed for nine years very well. We'd gone from a massive deficit situation after the Christchurch earthquakes and the global financial crisis. We'd brought the books back into surplus and we had choices as a country. When you have budget surpluses you've got three options: you can reduce taxes—not you but a sensible Government—spend more or pay back debt. And it's only appropriate that there should be some balance in that. We had modest tax cuts we had signalled some extra spending and we were paying back debt. This Government of course has changed the whole emphasis purely and simply to spend more spend more on every occasion. So the answer to every question is to spend more and they are implacably opposed to any reduction in tax—notwithstanding the fact that inflation grabs a little bit more every year. Of course on top of that they have brought in the fuel taxes that Aucklanders are paying and are very angry about at the pumps as we speak. The only people that are happy with the regional Auckland fuel tax are the owners of petrol stations around Franklin and somewhere north of Ōrewa where they've seen a massive increase in people coming in to their things in order to avoid the fuel tax. So we believe we should be leaving money in the hands of New Zealanders. The tax rates which are referred to in this bill should have been what National had put in place and that would have put more money back in the hands of hard-working New Zealanders and it's a shame that it's been taken away.Now if I can turn my attention in my remaining time to the positive elements of this bill which are a legacy from some of the hard work and policy analysis of the previous National Government and I commend this Government for carrying them on. In particular I think people will be interested in the changes around KiwiSaver. I'm looking forward to the opportunity of working through these matters in the select committee over the next few months to ensure that they've got the details right.Some of the things that we're going to be looking at with this legislation are around—well one thing allowing people over the age of 65 to join KiwiSaver. Now you might think well why would they want to do that? Well actually the funds management business in New Zealand is not huge but actually some of the lowest fees available for people investing in managed funds are actually through the KiwiSaver products that are now building size and scale. You can actually get access to some good managed funds—whether growth or balanced or conservative—at reasonable fees through KiwiSaver providers. The law at the moment didn't allow you to join over the age of 65 if you wanted to put some money away. Of course you can always take it out at any stage over the age of 65 but you couldn't put it in. The primary reason for that was because of the kick-start payment that used to exist but no longer does. So we think that's sensible.It also adds a couple of extra rates to KiwiSaver contribution rates. So at the moment an individual can choose to pay into KiwiSaver at 3 percent 4 percent or 8 percent. That's not all that flexible and so this bill includes a 6 percent and a 10 percent opportunity as well. I think that's all important because the broader idea for KiwiSaver is to make it easier for New Zealanders to put a little bit of money aside for their retirement not to replace the universal national superannuation that we have as a country that works well but to augment it and to increase their savings over time. So we want New Zealanders to have the ability in times when they feel they have the resources available to themselves to put a little bit more into their KiwiSaver funding and that will all add up.It also slightly limits the time available for a KiwiSaver contributions holiday and that ended up being five years. We think that's actually too long because people can get out of the habit of putting into KiwiSaver and will reduce the available funds that they'll have later in life. So the proposal here is to reduce that from five years to one year and to change the name from contributions holiday" which is something that everyone likes the idea of—having a holiday—to a "savings suspension". It's a minor thing but it does send a signal that we're not talking about holidays here; we're actually talking about suspending the opportunity to put some money away for retirement options. So we think that makes sense and we're looking forward to working in the select committee about that.Some of the more mechanical areas around the short process ruling which has been mentioned by the Minister in his speeches—it is actually a very important area which will enable small businesses to more easily apply for a binding ruling from the Inland Revenue Department on any tax matter. So it's just a matter of when there's uncertainty and when a business is not clear about what it can do whether it can claim a deduction here or what their exact tax liability is the current process in order to go for a tax ruling is very expensive and time-consuming and cumbersome. This process is much better tailored for small businesses so that they can actually get some clarity around their tax position earlier rather than letting things fester and get out of control. That is I think a reflection of the fact that the vast majority of companies in New Zealand are small. When we talk about small business in New Zealand it is actually very small business and the resources that they have available for complicated tax planning are not huge. So I think that's a practical way we can make a real difference to New Zealand businesses and maintain the integrity of the system.The final area is around the personal tax summary in order to get a tax refund. This will—on the basis of all the investment that's been made in technology—enable about 750000 New Zealanders to get refunds due to them without having to go through actually applying for them and the complicated system there and again that makes sense. So when we look at this bill there's much that we support and we will work collaboratively with the Government through the select committee process to ensure that that is as good as possible but we will oppose it on the basis that it represents a real missed opportunity to give to New Zealanders a little bit more money back in their pockets as tax cuts which they richly deserved and which were taken away from them by this Government."