Goldsmith PaulHon PAUL GOLDSMITH (National): Well it was fascinating just hearing a New Zealand First member saying that we should be happy to be paying taxes so that they can give money to new diplomats in order to bring about trade deals when New Zealand First have voted against most of the trade deals they have come across and they've always been implacable opponents of trade. So that was a very interesting observation there from the member on the other side of this House.So here we are; we're in the third reading of this taxation bill. It's the annual rates and the first point of course is that these annual rates that are being put in for income tax have not been adjusted for inflation. So every year the Government is sneaking a little bit of extra money from Kiwis in order to feed the beast—the tax beast. Most other areas of Government are adjusted for inflation. If you're on a benefit you get an adjustment for inflation. If you're in many employment roles you get an adjustment to your income for inflation. But we're not adjusting the tax rates for inflation and so the effect of that over time is that we end up paying more tax.Dr Duncan Webb: That's not in this bill.Hon PAUL GOLDSMITH: Pardon?Dr Duncan Webb: It's not in this bill.Hon PAUL GOLDSMITH: Well that's the point I was making.Dr Duncan Webb: So talk about something that is.Hon PAUL GOLDSMITH: I can talk about whatever I like thank you Mr Whatever Your Name Is from the other side. What we're talking about here is the fact that the rates that are listed—10.5 percent up to $14000. So the first $14000 you earn you're paying 10.5 percent income tax. From $14000 through to $48000 you're paying 17.5 percent—a pretty low rate—but when you hit $48000 you start paying 30 percent of your income in tax and if you hit $70000 you're paying 33 percent.Now with each passing year as inflation increases earnings and growth it means that more people are pushed into those higher brackets. So a bigger part of your portion—say if you're earning $60000 you've gone up $5000 over a couple of years then more of your income is going to be paid at that 30 percent rate. And that happens right across the economy and adds substantially to the amount of tax New Zealanders are paying. If you look at it over three or four years it runs to thousands and thousands of dollars of extra tax for the average New Zealand family. And that's why Simon Bridges our leader has indicated that we're keen to adjust those rates for inflation and this bill is a missed opportunity from this Government that says that it's interested in the wellbeing of New Zealanders but in reality has a very old fashioned view of the world which is take more tax more spend more and expect people to be happy.If we look at the broader message of this Government it is that they're going to spend a lot more which is what we're getting for all these taxes. They're spending an extra $3.8 billion in this Budget just passed—$3.8 billion; just think of that. The previous Government was spending about an extra $1 billion in each Budget so they've almost quadrupled the rate of new spending. So they're going to spend a lot more over time but the problem is that the economy is slowing very sharply. If you're going to spend more but the economy is growing slower the inevitable consequence of that is that down the line they're going to have to put up taxes even further or they're going to have to increase debt. Neither of those things is great for the long-term future of this country.So here we are; we've got this tax bill which fails to take the opportunity to adjust those tax rates for inflation meaning that we'll be paying more tax. So the obvious question is: well what are we getting for it? What are we getting for all this tax that we're paying? And I think New Zealanders are waking up to the fact that it's a bit of a mixed bag there. When people looked at the Budget of course everybody probably agreed that we should make more investment in mental health and that's something that we would certainly have done if we'd had the opportunity to form another Government as we were planning to do with the very many projects that we had under way. Not so convincing is the $3 billion that Shane Jones spends in the Provincial Growth Fund for example. Sure you'll find some useful things if you spend $3 billion but there'll be an enormous amount of waste and we've seen that with the infamous mulching of the trees up at Ngāti Hine and many other examples. Then if we think of the free fees: $2.8 billion gone to not having an extra single student coming along—in fact fewer students—and this year they've had to admit that they're not going to spend all the money because rather than the lift of 80000 new students they just didn't get them.It's that kind of poor-quality spending that is the underlying driver of the need for this increased taxation that we're seeing. And ultimately the thing about tax is that the more you do of it the more impact you have on economic growth. Our friends over in the Greens have always clearly understood that if you want to reduce smoking for example if you put up the price through taxes and excise then you will discourage people from doing it. But they have never followed that same logic when it comes to taxing income and work. They refuse to see that connection but we do and we do recognise it.Hon Andrew Little: What a stupid argument.Hon PAUL GOLDSMITH: It's not a stupid argument. I'd be very keen for the member—Hon Andrew Little: Employment is growing. People are paying taxes. It works.Hon PAUL GOLDSMITH: Eh? So the higher the rate of taxation on work according to the other side has no impact on people's inclination to do it. Well we all have decisions to make—Hon Andrew Little: The member is better than this—the member is better than this. Make a sensible argument.Hon PAUL GOLDSMITH: Is the Speaker going to let me—or do I have to sustain such a barrage from the other side while I'm trying to give a reasoned and careful and considered speech on a topic?ASSISTANT SPEAKER (Adrian Rurawhe): Well if you're asking me for a ruling or a comment on it there was a direct interaction between you. So my encouragement to both members is for the member on his feet to carry on with his kōrero.Hon PAUL GOLDSMITH: Thank you very much. The member over there is renowned for being quite loud and so I momentarily lost my train of thought.Clayton Mitchell: Did you have one?ASSISTANT SPEAKER (Adrian Rurawhe): Well I had one. Thank you.Hon PAUL GOLDSMITH: The second point I was making was in relation to the changes around the ring-fencing of rental losses. This is a complicated area and there are plenty of people who—we all agree that reducing the cost of new housing so that New Zealanders don't have to have so much of their wealth and income devoted to housing is absolutely a massive issue for the country and one that we need to be focused on. We heard a lot from this Government talking about the fact that they were going to reform planning laws and we heard a lot from David Parker on this topic and many others and we haven't seen anything on that score so far whatsoever but they certainly have come quickly with the taxes and the ring-fence is—well you can argue about whether it's a sensible thing to do. The general rule in our tax law is that you are able to write off expenses against income and so this sort of changes that basic rule.The only point I would make to the Government is you just do need to be careful of the context here because there have been a significant number of things since this Government came in that have added significantly to the costs and reduced the potential profitability of renting properties. One short-term consequence—and you know these things will sort themselves out over time—is that there could be fewer properties. People could withdraw from the market. Nobody's forced to rent out properties. It's not compulsory. So people can sell their houses to other people and you might find that a young couple buy their house which is a wonderful thing but if it was being rented out to five or six university students for example then that does have a consequence for the overall housing stock. If there is a shrinkage in the amount of houses available for rent then that can have a real consequence in terms of rental profits in the short term.So that is one of the most founding basic principles of good government is that one always has to be careful of unintended consequences from whatever legislation that you bring in. So this is one where we'll be watching with great interest and deeply concerned because like I say if you're concerned about improving the affordability of housing which we all are in this House then most people will agree that an important part of that is getting on with the planning legislation. Like I say notwithstanding all the talk prior to the election and all the promises of Phil Twyford to do radical reform—ASSISTANT SPEAKER (Adrian Rurawhe): Order! The member's time has expired.