Clark David: Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill — First Reading 
Text is incorporated into the Bound Volume 
Clark David: Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill — First Reading 
[Sitting date: 29 November 2012. Volume:686;Page:6976. Text is incorporated into the Bound Volume.] 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 The Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill is a bill that Labour will support albeit within the wider context of concern that this Government lacks real vision for making the changes that are needed across the economy to get our economy back on track. 
This Government has the worst economic record of any Government in the last 50 years and here we are debating a bill that makes minor changes across the tax framework. It will be interesting to see what things come up at the Finance and Expenditure Committee because some of the rules prescribed could well be questioned—and I am sure they will be—by those with an interest and there are alternative ways of going about skinning the cat of tax avoidance in terms of assets that are privately owned. 
This bill makes changes that are important in relation to the livestock valuation methods. Switching methods of livestock valuation has provided farmers with an unfair advantage in terms of tax for a very long period of time. Those farmers who followed the rules as they were intended to be used were placed at a competitive disadvantage. The Labour Party supports this change because it is a fair change that makes sure these rules are applied in a fair way. I understand this bill provides some exceptions and no doubt that is around tidying it up so that it is a policy that can be implemented for the benefit of our country. 
There is some rich irony of course in the Minister talking about all New Zealanders paying their fair share. Today I have released information that makes it clear that multinationals like Facebook are not paying their fair share in this country. We have seen it pay $5000 in tax in New Zealand in 2010. It has gone up a little to $14500 in 2011. When it has 2.2 million users it seems unbelievable that in 2010 it paid less tax than your average New Zealand labourer. When we do not make progressive changes to our tax system and we do not close loopholes we end up with a system that is unfair and that undermines the credibility and fair functioning of our tax system. 
This bill could go a long way further to address the big issues in our economy but it is stuck addressing one or two sensible matters without progressing the bigger picture. We will certainly be supporting the changes proposed in terms of livestock valuation because they make the system fairer. 
I am sure the changes in respect of mixed-use assets will be hotly debated at select committee. Businesses that use an asset for fewer than 62 working days—if the asset is simply used on working days—will find it is considered a mixed-use asset and the tax rules applying to that asset will change. There are other ways of addressing this problem such as applying rules in a similar way to which the fringe benefit tax rules are applied in respect of cars. It is a fair question to ask why we are not going down that track and why we are instead creating some complex rules that will be difficult to police. 
Of course these mixed-use assets are close to Kiwis’ hearts. We know that the home boat bach and aircraft—if you are fortunate enough to have these assets—are things that will be looked after and valued both for private use and public use and these things are dealt with very directly in this bill. I do not want to go too far down the route of exploring whether these rules will be applied to cabbage boats or whether helicopters owned by German billionaires will be captured within these rules such as the helicopter owned by Kim Dotcom that flew the member for Epsom to and from the Dotcom mansion in John Key’s electorate. 
Hon Trevor Mallard 
: It landed beside the giraffe which he then forgot. 
Dr DAVID CLARK 
: Mr Mallard tells me that the helicopter landed beside a giraffe which Mr Banks must have forgotten. He certainly forgot about the money in the brown envelopes he was handed. You know all of this sounds a little bit implausible and one hopes that the Government will be able to remember how to apply these laws if it is fortunate enough to pass them through the select committee process and refine them in an appropriate fashion. 
These issues are sensible to address but as I said at the outset there are many ways to skin this cat. There are other things that could be done that we know will not be done because the Inland Revenue Department’s computer systems are ageing. The core FIRST IT system is over 20 years old it can no longer handle big changes and so this Government is in the process of backtracking on various changes it has realised it cannot make. It is also highly likely that the Government would not currently be able to introduce a pro-growth capital gains tax should it see the light and understand the benefit of sending a neutral investment signal to business people rather than one that implies tax avoidance through investment in housing. 
That problem alone probably limits the scope of this bill in a way that is incredibly unfortunate. The current Minister of Revenue has been aware of this problem for all the 7 years that he has been Minister and yet he has failed to lay out a credible time line for fixing the computer system and failed to be transparent about costs and processes. We saw today in the House at question time his refusal to release any information on 80 documents directly relating to the business transformation process that the Inland Revenue Department is undertaking in order to eventually—one hopes—update those IT systems but we do not know. Mr Key said on Valentine’s Day this year—on 14 February—that Kiwis need an IT system that works in their Inland Revenue Department. That is a sensible thing to wish for. I support him in that. 
Dr Rajen Prasad 
: He was loving it. 
Dr DAVID CLARK 
: He was loving it. I support him in that because every country in the Western World needs a functioning tax system. But we have seen no action since. 
The Government has not announced any changes has not announced any credible time line or a change programme. Instead we are left tinkering with legislation that will not change much. It will plug a little hole here or there it will debate what the best way to do things is or it might change some of the GST rules and we have seen of course the Government doing that before. Mr Key said he would not put up GST to 15 percent—then I think he said we live in a dynamic environment—and next thing you know it was 15 percent. Kiwi families have been struggling ever since because those GST changes hit those families in the middle and on low incomes the hardest. Those who are best-off are doing pretty well. We understand 90 of the top 100 earners in New Zealand do not declare tax that is consistent with being on the top tax rate. Although they may have hundreds of millions of dollars they are not declaring income that is above $70000. So those who are very well-off carry on as they were without being challenged by a proper functioning tax system. 
Tax revenue has dropped 4 percent under this Government’s watch. That is partly because it has overseen the worst economic growth record of any Government in 50 years and partly because of policy changes it has made and in small part it is due to the impact of the global financial crisis. That is the advice that has come from its own department—that the global financial crisis is only a small part of that picture. The Government is mismanaging the economy. 
As I come to a conclusion I want to point out that Labour will support this bill going to the select committee because we can see the benefit in addressing some of these loopholes. But we think that this is a lost opportunity for Kiwis to have a better fairer tax system to implement pro-growth tax reform that would include a capital gains tax and would increase savings through universal KiwiSaver and to introduce research and development tax credits. We would put in monetary policy changes that would give the Reserve Bank the tools to manage the exchange rate in the interests of an export-led recovery. We would also build 100000 affordable homes over 10 years. We would be converting the dole into a subsidy for apprentices. These things would actually grow our economy unlike the tinkering we see time after time when bills come before this House in the Government’s name. 
This Government is out of ideas and out of plans. John Key is disappointing New Zealanders. He is not delivering on the promises he made and he is out of touch. It seems that Mr Key is content to see New Zealand decline. He continues to oversee the worst economic record of any Government in the last 50 years.