Turia Tariana: Taxation (Annual Rates and Budget Measures) Bill — First Reading Second Reading In Committee 
Turia Tariana: Taxation (Annual Rates and Budget Measures) Bill — First Reading Second Reading In Committee 
[Volume:672;Page:18895] 
Hon TARIANA TURIA (Co-Leader—Maori Party) 
: 
 Tena koe Mr Assistant Speaker Roy. Tena tatou e te Whare. The Taxation (Annual Rates and Budget Measures) Bill gives effect to tax reforms announced in Budget 2011 to reduce the fiscal costs of the KiwiSaver and Working for Families tax credits programmes. This Budget was never going to be a walk in the park. The astronomical fiscal impacts of the 6000 earthquakes that have cumulatively taken their toll on Canterbury were unprecedented and certainly not anticipated. Then of course there have been blizzards droughts leaky homes finance company collapses and the AMI and South Canterbury Finance sagas to name but a few. 
The damage caused by the two earthquakes has been estimated as costing around $15 billion which is about 8 percent of GDP. At even the most minimal budgeting we require $5.5 billion for expenditure such as temporary housing repairing roads and restoring infrastructure with another $3.3 billion to recognise the costs of both the Earthquake Commission and the Accident Compensation Corporation. So something had to give. 
I acknowledge that for most New Zealanders there has been an incredible sense of generosity of spirit that recognises that there was simply no room in this year’s Budget for discretionary spending. Of course there are always those looking for a soapbox from which to project their particular brand of attack. But actually the biggest challenge that faces any of us is how to reprioritise in order to ensure the best value for the limited resources that we have. 
This concept is particularly well known to tangata w’enua communities. The practice of kaitiakitanga entails an active exercise of responsibility in a manner beneficial to resources and the welfare of the people. Kaitiakitanga is synonymous with the notion of being prudent. The practice of rahui illustrates how one might have to exercise restraint in order to ensure sustainable management and growth of the economy so as to provide a stable and secure environment for future generations. When we look at both of the key tax reforms articulated in this bill they remind us of the behaviours and attitudes of our tupuna in tightening the belt curbing excesses and living within our means. 
The objective of the changes in the Working for Families scheme is to reduce the fiscal costs of the scheme while protecting amounts of tax credits for lower-income earners and minimising the effects on work incentives. As a result of alignments that will be made as a result of Budget 2011 the scheme will be much better targeted to vulnerable families. A number of the families who are earning higher up the income scale will receive a little less than they currently do. The worst-case scenario for them is that they may no longer qualify. 
Ten weeks ago the Maori Party issued a challenge to the Government asking for support from higher-income New Zealanders to exercise what we might call manaakitanga or good old-fashioned charity beginning at home. In our statement entitled “Time for those who ‘have’ to help those who ‘have not’ ” we asked the Government to promote generosity by raising taxes for those on incomes over $70000. This Taxation (Annual Rates and Budget Measures) Bill is an honourable response to that tono. It better targets Working for Families at lower-income families who need more help. It will be less generous to higher-income families. 
Take as an example the case of Amohia and Hemi on a combined family income of $40000 per year with three tamariki. Currently they receive $280 a week in Working for Families tax credit. From 1 April next year this will go up by $4 a week which is $16 a month. Down the road lives Sonya on a salary of $90000 with two children. Her income level is right near the top so she currently receives only $18 a week from Working for Families. After the changes she will receive only $7 a week which is $28 a month. When we talk about impacts like this in single dollar terms it is always hard to understand just how effective the changes can be. But the important point is that the changes will be made gradually in a way that minimises the impact on these families. 
I think it is really important that each of us starts to cultivate the art of financial literacy in our homes so that we truly understand the state of the nation and the different levers that impact on our well-being. I have heard a lot of ranting about how the 2 percent lift in GST has brought the country to its knees. Yet missing from that same korero is a flabbergasting statistic that under the term of Labour electricity prices over the 9 years rose 72 percent. That is akin to a jump of 8 percent each year. Although the prices have risen 9.5 percent since this Government took office the rates of rise have halved to under 4 percent a year. But it is still a hefty rise from one decade to the next. Added to that the price of petrol has risen by 17.1 percent. Our heavy reliance on oil demands that we look seriously at establishing alternative renewable sources of energy—a cause that the Maori Party and many hapu iwi and marae are actively considering. 
The other raft of changes in this taxation bill is to do with KiwiSaver. The changes alter the balance of contributions to KiwiSaver accounts away from public financing and towards private saving. This is another approach that the Maori Party has supported in terms of reducing how much money the Government borrows from overseas to put into KiwiSaver. Our concerns around KiwiSaver are that although savers and employers will have to pay more to make the scheme more affordable over the long term the Government is lessening its commitment. This may have a backlash effect in terms of discouraging the other two partners in the scheme. In other words we are mindful that reductions in incentives may end up undermining the confidence in the scheme. 
If I take into account what the Hon David Cunliffe said one would think that the majority of KiwiSavers are Maori families. I think that if we were to look into that particular issue we may find that they are in the minority in terms of contributing to the scheme. They do not earn the $70000 that the member talked about and not many of them earn the $40000 that he talked about either. 
The other key concern that we have put forward is whether any increase in the minimum payment by savers could prove unaffordable for lower and middle income constituents who are already struggling to cope with rising costs. That is why we opposed the introduction of Labour’s KiwiSaver scheme when the individual contribution was 4 percent as we believed it did not do enough for the less well-off and particularly for the w’anau of the working poor and the families of beneficiaries. 
We certainly are of the view that those people on lower incomes should carry less burden proportionately than those who are on higher incomes. We will be concerned if any disincentive to save because of increased payments causes them either to not enter the scheme or to take contribution holidays. But also we do not want to overemphasise KiwiSaver. We all need to return to the old ways of the practice of good saving and there are many other methods of encouraging this to happen. We have been very supportive of the KiwiSaver initiatives such as the Whai Rawa programme. This scheme is designed to provide a base level of savings for all registered Ngai Tahu members as well as supporting and incentivising a culture of savings and asset building. From all accounts we understand it has been highly successful. 
The Taxation (Annual Rates and Budget Measures) Bill provides Parliament with the opportunity to make alterations to the generosity of those schemes particularly Working for Families where it reaches into very high income levels where these people have enjoyed reasonably good tax cuts. We support the first reading of the Taxation (Annual Rates and Budget Measures) Bill.