Cunliffe David: Taxation (Business Tax Measures) Bill — First Reading 
Cunliffe David: Taxation (Business Tax Measures) Bill — First Reading 
[Volume:652;Page:1078] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Labour will support the Taxation (Business Tax Measures) Bill as a small step in the right direction. In so doing we point out that we have just witnessed one of the modern miracles of MMP. The member who has just resumed his seat—small but perfectly formed—which seems appropriate to this tax package was indeed also the former Minister of Revenue who worked on many of these items during the time of the previous Government so he knows well that what we have here is essentially a continuation of previous thinking. 
In my remarks today I will take the House through some of those commonalities and illustrate where the thinking really does reflect what Labour was doing anyway. I ask who would dispute the idea that we need to cut some red tape lower some compliance costs and ease the burden on business because we all need particularly at this time New Zealand businesses to be able to employ improve their bottom lines and cope with the cold winds that are coming in from overseas. The second part of my remarks will balance that with a recognition that this bill is in no way a sufficient response to the challenges that we see. 
First I refer to the content of the bill. As the previous speaker has illustrated the bill contains several measures in the area of tax simplification and forms part of the recent package announced by the Prime Minister which includes several elements already implemented through Order in Council. The first of those was the reduction in the use of money interest rate. Of course that is the rate that the Inland Revenue Department charges a business if it underpays its provisional tax. The Government has generously reduced that from 14.24 percent to 9.73 percent. Labour’s policy was to make it reciprocal with the credit interest rate that a business would get if it overpaid which has now been reduced to 4.23 percent. In other words under the current Government businesses will still pay twice the use-of-money interest rate that they would have paid if Labour had been re-elected and implemented the policy that we had already signed up to before the election. So that provision is as good as far as it goes and it goes only half as far as Labour would have gone anyway. 
The second one is implementation of a higher GST payments basis threshold. Labour had already commissioned advice on that matter and we had already signalled that we would raise it. The GST registration threshold is similarly raised and that was already a measure contained in Labour’s previous tax bill. Businesses with $10000 or less of business-related legal expenditure can claim deductions for that—good news for lawyers! The PAYE once-a-month filing threshold is raised from $100000 to $500000. It was already Labour’s policy to increase it to $250000 and I think it is fair to say that with the current events that would likely have been reviewed upwards. 
It is the same with the changes to the fringe benefit tax annual filing threshold. It was already Labour’s policy to increase that from $100000 to $250000 so again in this bill we are seeing the implementation of policy that was already in the works anyway. That is no bad thing. I am pleased to see the Government doing it and happy to support it on the way through but I just want to be very clear about the fact that it was already in the pipeline. 
Of course there are some grab-bags here of tax simplification measures where the bill fast tracks certain things like ensuring that fringe benefit tax liability on vehicles is simplified “safe harbour” thresholds for provisional tax use-of-money interest increases lower stock trading thresholds and GST 6-monthly filing return thresholds. The thing all these seeming details have in common is that they were already in Labour’s tax bill. They were already there. By giving it urgency we welcome the fact that the Government is implementing Labour’s policy. Good on it I am happy to support it but that is where the nice stuff ends because this is in no way a sufficient response to the crisis we face. 
Now members may have thought when they woke up this morning and read their  
Dominion Post 
 that they had fallen on to a different planet because there in Tracy Watkins’ excellent column was the chief economist of the International Monetary Fund telling us that Governments around the world must “commit … whatever it takes to avoid a depression.”; “Above all adopt clear policies and act decisively … Do too much rather than too little.” In other words no less than the chief economist of the International Monetary Fund is telling New Zealanders we need to do something more like the Rudd package. The difficulty this Government has is that the so-called rolling maul of initiatives is really drip-feeding. Businesses are telling us that they do not want to be drip-fed and they certainly do not want to be drip-fed only a rehash of stuff they knew was in the pipeline anyway. It is like putting a new set of clothes on something that was already there. 
Hon Parekura Horomia 
: It’s plagiarising. 
Hon DAVID CUNLIFFE 
: It is plagiarism. Thank you. It is plagiarism but we are happy to support it. We are not proud. Getting the job done is what counts—that is fine. But I say to the Government it should recognise the dangers of drip-feeding. It does not give the business on the corner a vision for the future. It does not give it a game plan. That is why people are saying to this Government: “Where’s the plan Sam? Where’s the plan Bill? Where’s the plan John?”. 
 One large business in Lower Hutt rang us and said: “ Look we’re largely National voters we voted for this Government . We are having to review our position week by week to see whether we can stay open. A week for us is a long time in business. What are these guys doing? Why haven’t we heard a plan from them?”. And every time we raise that issue what we hear is that a little more is coming next week a little more is coming next week. This week apparently we are getting an infrastructure package of wait for it $500 million. Woo hoo—500 million! Now if my memory serves me correctly Labour had already committed to around $2 billion worth of new infrastructure pre-election so it is a case of “Vote National and you get a quarter of what you would have got.” Well maybe there is more coming after that. The point for New Zealanders is that they do not want to be drip-fed. They want to see the game plan. They want to know that the Government has a plan because that in itself will underpin confidence. It will mean that businesses are able to go to their banks and underpin the needed borrowing to get them through the rough weather. Indeed it underpins the ability of the banks to go to their international swap partners and say that they need to have the credit to keep New Zealand businesses running and that the Government is up for it the Government is good for it and the Government has a plan. 
Maybe it does but who would know? The Government members are not telling New Zealanders. They are taking this measure under urgency. They are taking a whole lot of other very small measures under urgency most of which are policies of the previous Government which we are happy to support but the point is that Mr English knows that that is not a Southland farmer’s version of a game plan. He knows that businesses are saying they are hungry for more. They have an employment talkfest coming up. By God expectations are being raised that something substantive will come out of that; if not there will be huge disillusionment. 
To sum up there are a range of small useful desirable measures in this bill. They are very largely measures that the previous Labour Government had under way before the election. In some cases—probably the most important the reduction in use of money interest on provisional tax—the cuts go only half as far as Labour had already announced it would go. In speeding things up and giving urgency to tax simplification the bill simply accelerates measures that had already been announced in previous Government legislation. 
Let no New Zealand business owner no New Zealand worker be in any doubt. This stuff is OK as far as it goes but there is nothing new here and it is nobody’s idea of a crisis response plan. The rolling maul is jargon for drip-feeding while what New Zealanders need is confidence that there is a way through this unprecedented crisis. They need confidence that their Government has a way through can see the big picture and has the credit markets the debt levels and the stimulus package lined up so we can chart our way forward. Only then can they go to their bankers. Only then can their bankers go to their partners and underpin the confidence we all need. 
Labour will be voting for this package. We wish we were able to vote for a whole lot more. We look forward to the Government coming back to the House with the next round of measures. It could not be too soon.