Robertson Grant: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — First ReadingText is subject to correctionRobertson Grant: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — First Reading[Sitting date: 10 March 2015. Volume:703;Page:2108. Text is subject to correction.]GRANT ROBERTSON (Labour—Wellington Central):Is it not interesting that in the two contributions that we have had from the Government speakers so far they have devoted a grand total of around 30 seconds to Part 1 of this bill which is around child support. There is a reason for that. What we discover when we look at the regulatory impact statement and we cast our minds back to the Child Support Amendment Act of 2013 is that Part 1 of this bill is about trying to clean up one of the biggest messes that we have seen in the administration of government in many years. We are talking here about a patch-up job to make sure that there is only additional expenditure of $163 million. That is how bad it has got—it is actually an improvement on the situation when an additional $163 million has to be shelled out.Part 1 of this bill relates to measures around the changing of collection of child support that were supposed to be implemented by 1 April 2013 then by 1 April 2014 and are now being implemented already today for 1 April 2015. And this legislation will not have passed by then so it will be retrospective legislation on legislation that was meant to have been passed 2 years ago. This is incompetence. This is incompetence that is costing New Zealanders hundreds of millions of dollars and it lies at the feet of this Government and of the revenue Ministers Mr Dunne and now Mr McClay.Do not think that this will stop at $163 million because what lies at the heart of the problem here is a capital project—an IT project at the Inland Revenue Department—that is out of control. No one on that side of the House over the last 3 or 4 years has had their hand on the wheel of this project and it has spiralled and spiralled out of control. We are talking about a billion-dollar IT system upgrade that the Inland Revenue Department claims it needs and the costs just keep on increasing. It is going to make Novopay and the stuff-ups around Novopay look like a rounding error in David Bennett’s cheque book reconciliation. This is the biggest stuff-up that this Government has overseen and more details of it will come out.What we learn when we look at the regulatory impact statement on this bill is that the original cost of implementing these child support reforms was $30 million—a big price tag. There were people in the Inland Revenue Department at the time who baulked at that cost. But what is interesting is that as the business case was developed the costs escalated to $120 million—a huge level of expenditure. As those costs escalated one of the reasons they did—and this is from the regulatory impact statement—was that “One of the main assumptions in the business case was that the vast majority of expenditure would be operating cost.” So that means that at the get-go the Government did not even realise that fundamentally changing the way it collects child support might have some IT impacts and it might actually mean that the old clunky Inland Revenue Department system was not going to cope. So the cost escalates from $30 million to $120 million and then as 2013 and 2014 go on as small changes are made to the bill the cost escalates out to $210 million of extra expenditure.We are raising questions in the House every day about how Bill English is going to scrape through to a surplus. Well he has got big problems coming down the line here—here is another $163 million. So it goes out to $210 million and Todd McClay comes in on his white horse to save the day by choosing an option that delays part of the child support reforms. So actually it is not like we are saving the money; the Government is just not implementing part of the reforms. So actually it is still costing $210 million; it is just that today we are approving spending only $163 million of it. This is a shambles and Peter Dunne and Todd McClay have to answer some questions about where the oversight was. Did the National Government learn nothing from Novopay? Did it learn nothing from INCIS? What we have seen here is poor incompetent management of taxpayer money and every head on that side of the House should be down because this falls at the feet of the National Government—the people who tell us that they are great managers of the economy the people who shout and scream across at parties on the other side that they think have ideas for expenditure that might cost a bit of money. Well look after the $163 million. We are not taking it from the National Government any more. This is straight-out incompetence.When we actually go through and look at what was said at the time the Child Support Amendment Bill was passed—and I do want to give credit to the Labour Party members who when the bill went through in late 2012 actually raised with the Government the issues with the implementation of the system. The Labour members said in the minority report: “We continue to have concerns about the adequacy of [the computer system] at Inland Revenue … The Prime Minister admitted [that the system is not up to this]”. It goes on to talk about the fact that although the Inland Revenue Department suggested there would be implementation issues it thought that it could deliver this. It could not. It did not work and no one on that side of the House was keeping watch over the expenditure of taxpayer money.So what we find ourselves with now is a bill that is in front of the House to try to clean up this mess. And we are going to have Government speaker after Government speaker talking about anything else other than that. Yes there are some other measures in this bill that are worthy of consideration and that we must look at. I am sure that other colleagues will talk in more detail about the issue around research and development. But we have had calls consistently from the business community for a simple solution on how to encourage and support research and development and on how to make sure that those companies at the beginning of their lives can invest—but not just at the beginning; onward throughout a company’s life so that they can continually make investment. Companies want certainty; they want simplicity. That is why the Labour Party has consistently proposed a 15 percent research and development tax credit. What we have got in front of us here is a complex system that will benefit a small number of companies and nobody is completely clear yet about how it will really operate.This was an opportunity for the Government to actually adopt a clear and consistent policy. It is worried about the fact that business wants something like the research and development tax credit. But what is being proposed here is a fraction of that in a more complicated way and we will obviously want to ask questions about that when the bill comes back before the House. We recognise on this side of the House that the best kind of tax system is one that is fair one that is simple and one that is applied consistently and where there is avoidance it is followed up. There is a failure in this bill on two significant counts on those core principles of a tax system. The first of those is the failure to come up with a decent idea on research and development and the second of those is a child support system that is completely out of control.I might say that electorate MPs from all sides of the House I imagine—and perhaps some list MPs as well—will have been starting to get people coming into their offices in recent days as the first letters about this new system are going out. And there is confusion—there is complete confusion going on. There are so many issues here that we believe the Government has not thought through properly. When the Child Support Amendment Act that is being amended through this bill went through minority reports were issued by the Labour Party the Green Party and New Zealand First. All of us raised concerns about adequacy of payments and about the implications particularly for women of the changed apportionment of care costs. The 28 percent shared care threshold in the legislation is low. It is going to provide a significant concern for a number of parents and they are the ones showing up now in offices saying: “How is this fair?” yet here we are in March 2015 with the legislation finally in front of us for that very thing. It has been implemented in law. People are getting letters telling them that they have got to make these payments and the Inland Revenue Department is not even ready for it. The Inland Revenue Department does not even have a system to manage it today. How could this be managed any more incompetently?We will support this bill going through to the select committee because we have to sort this mess out but mark my words the cost to the taxpayer of this stuff-up—of this failure of management by the National Government—will be hundreds of millions of dollars and this Government must take ownership of its incompetence.