Goldsmith Paul; Nash StuartHon PAUL GOLDSMITH (National): Thank you Madam Chair. Obviously one of the biggest issues in this whole appropriations debate—or two issues really—is the flow of revenue into the coffers of the Government in order to cope with what is an extraordinary situation. The obvious point to be made is that the flow of revenue is not sufficient to cover the cost of the spending; therefore we're in an enormous amount of debt and then related to that is the impact that it's having in terms of jobs.Now the Minister might have caught up with some suggestions that our party has made this morning in order to make it easier for entrepreneurs to start up. One of the proposals is allowing people who have been made redundant during this crisis to be able—because one of the great concerns is that if you're suddenly made redundant and say you've got a $100000 redundancy which would be a good thing roughly a third of that goes in tax. So there's been widespread concern around the impact that that has on people who are facing unemployment afterwards. So our suggestion this morning has been to allow them to have that tax as a credit against a new business setting up and I'd be very interested to see whether the Minister thinks that's a good idea and whether that's something that he would be setting aside money for or why he hasn't in the appropriations so far outlined today.Hon STUART NASH (Minister of Revenue): Thank you Mr Goldsmith. It's not a policy that has come across my desk at this point or a suggestion. I do apologise—I haven't caught up with this morning's policy announcement but look I'm keen to take a look at it. I won't rule it out now but I'm keen to take a look at it.Hon PAUL GOLDSMITH (National): Then secondly of course we've got a large number of people who are facing unemployment and the Minister has responsibilities around KiwiSaver and the rules around that and the Government spends roughly a billion dollars subsidising New Zealanders into that KiwiSaver—$500 a year kick-start payment. Again a suggestion that's been made today is to allow people who have lost their jobs to access up to $20000 of that KiwiSaver fund to start a new business and I'd be interested in the Minister's attitude to something like that recognising the extraordinary times that we're facing and the possibility that there could be hundreds of thousands of people lost. There's nearly 400000 New Zealanders right now on the wage subsidy which comes to an end in the next few weeks and there's a great deal of uncertainty frankly as to how many of those will actually lose their jobs. The Minister of Finance has outlined many programmes that the Government will spend borrowed money on to try and create short-term jobs for those people but we fundamentally believe that it's entrepreneurialism in New Zealand across the private sector that will generate most of those jobs. So I'd be interested in terms of that KiwiSaver appropriation and the rules around it—which have hitherto been pretty tight; you can only withdraw it for a first home—whether he is of a mind to entertain that ability for people who have lost their jobs may have been made redundant having access as an emergency measure to that sort of money in order to start a business.CHAIRPERSON (Hon Anne Tolley): I'll just remind the member that we are actually on the Estimates for 2021. So lots of ideas but they need to relate to the Estimates.Hon PAUL GOLDSMITH: Yes indeed. Thank you.Hon STUART NASH (Minister of Revenue): Thank you. I'm less enamoured to this idea for two reasons. First of all Kiwis are able to access their KiwiSaver accounts: one of course is first-home buyers and the second is in extreme hardship you're allowed to access KiwiSaver funds to pay bills. KiwiSaver as we all know was set up as a retirement scheme and I think every Kiwi has bought into that. There are contributions both from your employer and your employee. If people are made redundant they are eligible for the COVID-19 Income Relief Payment programme which is the same payment they would get on the wage subsidy. So it's not as if if they're made redundant after the wage subsidy they're cut loose and that's the end of that.What I would say is that there are inherent risks of course in starting a new business; there is no doubt about that. In a normal course of you know pre-COVID business as usual there were between 3000 and 4000 New Zealand businesses that failed every year. Obviously in the deep recession we're in at the moment that is going to change significantly. We do understand that. My advice—and I suppose Madam Chair if you'll indulge me for one second I'm speaking here in my role as Minister for Small Business. I do believe what we've done is we've put a number of processes in place—for example $40 million of extra money into the regional business partners advice programme which is up to $5000 worth of vouchers. I just do think that there are other ways to perhaps raise capital or to retrain if someone has been made redundant and they have a good idea around how to set up a business. For me it does come down to that risk premium: less risk if someone is buying their first house—of course there still is risk but less risk; you could argue no risk at all. In fact you're mitigating personal risk if people draw down KiwiSaver funds in times of extreme hardship to pay bills. But I just think that drawing down KiwiSaver funds to start a business presents a level of risk to retirement savings that I certainly would feel uncomfortable about.Hon PAUL GOLDSMITH (National): So I suppose the broader more philosophical question is if people are choosing between keeping those funds in say a conservative default fund earning not very much and invested offshore whether or not we should trust New Zealanders to decide whether or not they want to take a very much higher risk as the Minister has correctly identified in setting up a business and starting a business—and that every New Zealander has a different view as to what risk they're willing to take.Just another question in the revenue space. Government has brought in various rules around the brightline test—the previous Government brought in a two-year brightline test for people buying and selling houses within two years needing to pay tax on the gains and that's been extended to five years. There is a very open question as to how effectively that is being policed by Revenue and I'd be interested to see what resources have been allocated to policing that new part of the tax code and what kind of results we've seen in terms of revenue gained and his confidence that that area of law is actually being properly enforced.Hon STUART NASH (Minister of Revenue): Sure. In terms of the brightline the extension obviously applies to taxpayers who acquired interest in land on or after 29 March 2018. There's been about $90.9 million of additional revenue assessed. For the period for 1 July 2019 to 31 May 2020 the Property Compliance Programme has assessed return on investment of about $8.96 to every one dollar spent. The manual review—this will be interesting—of brightline transactions found the final compliance rate for 2016 tax year was about 73 percent. So there is a lot of work to do here and it's hard to know whether the role is around education or people are being deliberate in the way that they are structuring their affairs or not paying tax when it is actually due. Inland Revenue has put a lot of resources into non-compliance. Obviously in the COVID environment a lot of resource was taken out of business as usual and put towards programmes like the Small Business Cashflow (Loan) Scheme and the wage subsidy scheme both of which Inland Revenue—well Inland Revenue obviously manages the Small Business Cashflow (Loan) Scheme and it worked very closely with social welfare to implement the wage subsidy scheme. But please be assured that Inland Revenue takes compliance very seriously.As the Minister one of the things I talk about a lot is the integrity of the tax system and we need to ensure that the integrity of the tax system is maintained hence the reason why resource is put into ensuring that New Zealanders do comply. As the member is well aware the final obligations on ensuring that people pay their tax does rest with the taxpayer but often the taxpayer does need a little bit of educating in terms of what their actual obligations are.Hon PAUL GOLDSMITH (National): I'd be interested if the Minister could sort of give some further explanation on that 73 percent compliance that he talked about there on the brightline test because on the surface of it it seems very kind of reasonably straightforward that if somebody buys a house and sells that house that within that period—it seems relatively black and white and reasonably easily evidenced and not much room for discussion. So is he happy with that sort of rate and just how vigorous is his department being in policing that? The related question is notwithstanding the crisis that we were facing we've obviously got a real revenue crisis as well and potentially a debt crisis and so it is important that Inland Revenue remains focused on doing its basic job which is collecting money and making sure that it comes in as per the law. So I just want to get a clear sense of when the Minister says business as usual is being put on hold just what work is being done and can you assure New Zealanders that the Inland Revenue remains focused on its core task?Hon STUART NASH (Minister of Revenue): I can assure the member that Inland Revenue does. In the 2020-21 Budget over $550 million was set aside for services to customers including informing the public about their entitlements and obligations. Am I happy with 73 percent? No I'm not at all. I'm not happy until in fact we get 100 percent compliance if I'm honest. Why aren't people complying? I actually agree with the member. I actually think it is very clear. It is black and white. But I think what happens—and this is my own personal view—is that people think Well shivers it's only one property. I can get away with this." and as a consequence they try and get away with it. What they don't understand is Inland Revenue has Land Information New Zealand data. We now are requiring people to put GST on every transaction. So it is easy for Inland Revenue to match houses bought and houses sold—well it is easier I should say for Inland Revenue to match houses bought and houses sold which they are doing and they will continue to do this vigorously and to pursue those who are not following the rules. As the member mentions at this point in time when revenue is dropping and we are in the middle of a 100-year recession we need to ensure that Kiwis meet their tax obligations. One thing I should mention is that one of the things that Inland Revenue has done during the COVID period and I think it's done very well is say to taxpayers—if a taxpayer is having difficulty meeting their tax obligations due to COVID then we have been very very clear to contact Inland Revenue or contact your bookkeeper or your accountant or go online and for goodness' sake enter into an instalment arrangement and Inland Revenue has the ability to write off use of money interest which would normally accrue on debt that is overdue. So I would just encourage anyone who is struggling with their tax liabilities to please get in touch with Inland Revenue or your accountant or bookkeeper and do not bury your head in the sand."