Foss Craig: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — Second Reading 
Foss Craig: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — Second Reading 
[Volume:644;Page:13441] 
CRAIG FOSS (National—Tukituki) 
: 
 I rise to speak on the second reading of the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill. I am speaking on a day that is actually a sad and tragic day. This day is when the Prime Minister with her arrogance and her arrogant Government will soon be jumping on her bulldozer to try to push through the most Draconian anti-democratic and disgraceful bill that New Zealand has ever seen. 
Rt Hon Winston Peters 
: Rubbish! 
CRAIG FOSS 
: My colleague over there might have another one. It is an absolute disgrace that on this day when I am speaking about this taxation bill we will also see the Electoral Finance Bill being bulldozed through. To make my point— 
Rt Hon Winston Peters 
: I raise a point of order Madam Speaker. I know this gentleman has not been here long but he knows full well that when you give a speech on the second reading you are required to at least try to focus on it and not to focus on what might be coming up later on the Order Paper. Now that is as old a rule in the book as there has been democracy itself which is one of the great things being upheld today. So I am asking the member to get back to his speech for which for some reason beyond my knowledge or understanding his party put him on his feet. 
The ASSISTANT SPEAKER (Ann Hartley) 
: I just ask the member to keep to the bill. 
Dr the Hon Lockwood Smith 
: I raise a point of order Madam Speaker. I have been a member of this House for some years and the Standing Orders of this House always provide for members to make passing reference to other matters. They cannot continue to speak about a matter not covered in the bill but in all the 23 years that I have been in Parliament—and the Rt Hon Winston Peters knows this full well—passing reference can be made to other matters which is all the member was doing. 
The ASSISTANT SPEAKER (Ann Hartley) 
: I just say to the member that what I have ruled is absolutely clear. I am just bringing the member back to the bill. 
CRAIG FOSS 
: I was just about to finish that sentence before I was interrupted by the other member. To make the point here this taxation bill was introduced not too long after the 2007 Budget. The Finance and Expenditure Committee has been working on it for 6 or so months now. I use that as a comparison against the major constitution-changing bill that will be debated in the Chamber later today which has had 2 weeks before a select committee. I want to make the point that there has been a lot of consultation around this bill and a lot of submissions on it. Submissions have been listened to the bill has been adjusted and debated and the common-sense test was applied along the way—unlike the most disgraceful bill that will be debated later on tonight. 
Yes this is a complex bill. Many many different activities and issues are addressed in the bill—matters ranging from research and development to charities income tax rates company tax rates and the foreign investment changes recently announced. It is well worth a read—at least the first 23 pages are. I suggest that members for interest read through the commentary. 
I take a moment to thank the members of the Finance and Expenditure Committee which generally works quite constructively and tries to work towards better law and better legislation. I think history was made when some of the submitters appeared before us. Members will note in some of the transcripts that there was actually a joint submission along the way from the Council of Trade Unions and Business New Zealand. I thought that was very interesting. 
The most pertinent and revealing part of the commentary is on page 23 which states the minority view that the National Party has put into this bill: “The National Party recognises that the company tax rates will be dropping to 30 percent but we believe that personal income tax rates should also be lowered.” That sums up exactly why National is voting against this bill. This bill does not address go near or touch on income tax rates other than to cement the current rates and schedules that are in place as we speak. That is why National is voting against this bill. Also as I alluded to earlier we are voting against this bill because its origins come from Budget 2007 which was a confidence and supply issue. Obviously National does not have much confidence in this current Government—nor does probably 60 percent of New Zealand now—which is why National continues to vote against any and all activities relating to Budget 2007. 
In fact that same Budget forecasts surpluses upon surpluses after 7 years of surpluses. In that same Budget forecast there is about $56 billion of tax revenue which is why National members argue that there is plenty of room in there for tax cuts. That same Budget also points out the borrowings that the Government under the watch of Dr Cullen will be undertaking this year. Those borrowings will be channelled into the governmental black hole and they may well be used to fund tax cuts. Those same monies raised from those borrowings—of which most are actually offshore—could also be used to fund contributions to the Superannuation Fund of $2 billion a year. So when Dr Cullen gets up and accuses all and sundry of borrowing for tax cuts quite frankly he is obviously doing it himself. 
As I said this bill touches on tax rates for the next financial year. During the committee we heard from the Inland Revenue Department. In the House recently the Prime Minister spoke about the billions of dollars—in fact the previous speaker alluded to it—of personal tax cuts that the Labour Government has brought in over the last few years. I was scratching my head at that moment because I could not think of $1 of personal tax cuts over the last few years—not $1. 
Sue Moroney 
: Working for Families. 
CRAIG FOSS 
: That is not a tax cut. Labour members need to understand the difference between a tax cut and a tax credit. I asked the Inland Revenue Department officials who administer tax cuts income tax and credit schedules—one would think they would know—whether they could name one lowering of any personal income tax rate or changing of any thresholds at all over the last 7 years. They could not name one—not one. In fact as we started to speak the only change that everyone could recall was when the Labour Government put up income tax rates in 1999. It took the top rate from 33c to 39c. At the same time it promised that only 5 percent of New Zealanders would be paying that rate. Now about 13 or 14 percent of New Zealanders are paying that tax rate. 
We acknowledge the lowering of the company tax rate from 33c to 30c and we have applauded that in this Chamber and in public. But again it actually almost raises more problems than it looks to solve because by having a 30 percent company tax rate a 33 percent personal tax rate a 39 percent higher personal tax rate and a 33 percent charity rebate the complexity in and around our tax system is getting worse by the day under this current Government. As I look on the table I see about six volumes of the income tax rewrite bill which would be an awful lot simpler if the top rates were aligned and there were no need for volumes and volumes of paper to try to stop arbitrage between the company tax rates and the personal income tax rates. 
Tax rates have actually increased over the last 5 or so years under the current Government because of fiscal drag. With this current Government pumping up inflation and pumping up interest rates yes wages and salaries have gone up—some may be matched with inflation some may be under inflation—but people have been dragged up so the notional tax take is a lot higher. It is $20 billion more this year than it was in 2000. 
I will talk about one of the measures in the bill: the research and development initiatives. Again the committee worked constructively and we like the direction this bill is taking with research and development initiatives. I think it is maybe too little too late but there is no time like the present to start. At least it may help to stop the plummeting of New Zealand researchers and developments and scientific researchers overseas. Minister Dunne noted the 3-year review around this policy. That should be commended and applauded. I would be quite keen to see that provision being applied to other legislation coming through this House. 
I would like to touch on the finance leases. Supplementary Order Paper 119 originally touched on finance leases in the bill. It raised a concern. I acknowledge that that issue has been pulled from this bill and will be looked at later by Treasury and the Inland Revenue Department. I am concerned that legislation was going to be used for a journey of discovery to discover how these leases were being used and who was using them. It was the threat of litigation and the threat of litigation against retrospective legislation that I think scared off the Minister and Treasury. I suggest that that issue probably should not have been in the bill at the start. 
To wrap up I say that there has been a lot of discussion around KiwiSaver. The committee spent a long time talking about the contribution rates both within the committee and with our submitters. In the bill there is a transitional period—the one percent plus one percent two percent plus two percent etc.—but after 2011 every single contribution rate will be 4 percent from the individual and 4 percent from the employer. What is so special about that date? Why can there not be a transition period after that date for those people who are new to the workforce? That concerns me. I wonder what Dr Cullen has up his sleeve in and around that date for his upcoming Budget. 
As I noted at the start National is voting against this bill because it is a confidence and supply issue for this Government. National has no confidence whatsoever in this current Government.