Thursday, 30 May 2024 (continued on Friday, 31 May 2024) - Volume 776 Sitting date: 30 May 2024 THURSDAY, 30 MAY 2024 (continued on Friday, 31 May 2024) … CHAIRPERSON (Barbara Kuriger): Members, before the lunch break, we were debating Part 4 of the bill. So just a reminder that Part 4 is clauses 33 to 39, "Income Tax Act 2007 amendments commencing 1 April 2025" and the question we're on is that Part 4 stand part. Hon Dr DEBORAH RUSSELL (Labour): Before the lunch break, we were back to dates, and I did question the Minister over the 1 April 2025 start date for this part of the bill, in comparison to the 31 July 2024 start date for the changes to the personal income tax thresholds. I just want to make sure I've got the explanation from the Minister correct. The Minister explained that for changes to fringe benefit tax (FBT) thresholds and employer superannuation contribution tax (ESCT) thresholds, the decision was made to have those changes start from 1 April 2025 for compliance cost reasons. The way the Minister's nodding, I sense I've got the gist of that. OK, so that's helpful. It's a really interesting decision, and I'm looking to see if the Minister asked his officials to do any modelling of it, because what it means is that from 31 July 2024 until 31 March 2025, employers are going to be over-taxed on fringe benefit tax and on employee superannuation contribution tax in comparison to the personal tax rates of the employees on whose behalf they are paying fringe benefit tax and ESCT. The fringe benefit tax thresholds are really, really carefully set. They look like very odd numbers, but they're really carefully calibrated so that if an employee is paid entirely in money—you know, salary or wages—then their personal tax rates are as set out in the Income Tax Act. But if they are paid in a combination of money—pretty easily taxed—and benefits, say like the use of a car or whatever, then you have to do a whole lot of grossing up of the value of the benefit and then taxing it back, and there are some pretty complicated calculations that go into that space. But the objective there is to ensure that if an employee is paid in salary and benefits—say $100,000 worth of salary plus benefits—compared to an employee who is paid straightforwardly in just $100,000 of cash, that the tax rates that are applied, whether it's through the personal income tax rates or a combination of the personal income tax rates and the fringe benefit tax rates work out exactly the same. Now, of course, the employee never sees the fringe benefit tax rates. They are paid by the employer, because it's the employer's decision to use the benefit and things like that. What it means is that if these changes to the fringe benefit tax rates and the employee superannuation contribution tax rates are not changed at exactly the same time as the personal income tax rates, then employers—small businesses, large businesses, Government departments, medium-sized businesses, little one-person bands and the like—are being over-taxed on fringe benefit tax and employee superannuation contribution tax. Now, the amounts per employee are not going to be large, but it is still over-taxation, and by the time it goes across numbers of employees, it could add up to a fairly significant amount. So there are a couple of questions here. Since when does the party that prides itself on being the party of business—and that's a bit dubious, actually—charge employers more? Since when do they add those sneaky extra costs onto employers? That's exactly what's happened here. Now, there could be a good reason for this. It could be a good reason. It could be that by the time the calculations were done, the amount of extra FBT and ESCT per employee was outweighed by the compliance cost of doing the calculation. So you weigh up the amount of tax paid versus the cost of actually paying the tax, and sometimes you might as well just pay the extra tax rather than go through the hassle of doing the calculations. I'm hoping that was the explanation. I'm guessing that's the explanation the Minister's going to give to me in a moment, but I actually genuinely want to know what's gone on there, because it looks odd. Now, maybe I've got the wrong end of the stick on this, but I would like the Minister to explain it to me. Following his explanation, I do want to dig into this, because this is actually quite serious, so I'll just wait for the Minister's explanation on that. Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. We're back from the lunch break on the home straight of this bill. We are nearly there. Kiwis will soon have the benefit of tax cuts which they've been waiting for. The prior member's question in regards to this—she used the term over-taxation; it's simply not the case. I mean, the status quo in regards to the rates is unchanged. The changing of the rates will come in on 1 April 2025. So it's not that anyone's getting over-taxed or more tax. The rates as they sit today are unchanged until that point in the future. Therefore, the reasons and rationale, as I outlined previously in an answer to the same question, relate to some of the compliance considerations of what happens when you introduce a change in the personal income tax rates part-way through a year. We've made that decision assessment based on the cost compliance trade-off, but rest assured that the rates of FBT that are paid today don't change all of a sudden today. They will be changing on 1 April, so no one's getting over-taxed. Hon Dr Deborah Russell: Madam Chair? CHAIRPERSON (Barbara Kuriger): Francisco Hernandez. Hon Dr Deborah Russell: I want to pursue this, Madam Chair; it's important. CHAIRPERSON (Barbara Kuriger): Share around. FRANCISCO HERNANDEZ (Green): Thank you, Madam Chair. Just a couple of questions to the Minister. They relate to clause 34 all the way to clause 39. We know that from the tax cuts that result from this, some of it will probably have to be funded from borrowing, which will result in future taxpayers funding these short-term sweeteners while also taking on additional burdens due to the social and physical infrastructure deficit. These tax cuts will lead to about $17.1 billion of extra borrowing. The tax package costs $4.17 billion, which means that future taxpayers will be paying for them in terms of the deficits, not to mention the infrastructure and Public Service deficits. So what advice have you had on the impact on future borrowing, and is this perhaps why they are not indexed to inflation, things like the pay rates? Because we won't be able to keep paying for them in the future. And if we're wanting to be providing services just at the same level of today—not even talking about improving services for the future, which is what we on this side of the House want—without raising any new revenue-raising measures and given that the operating allowance that the Minister announced yesterday is not even enough just to keep pace with current levels of service delivery—$13 billion of the $17 billion announced for the health spending is just to preserve existing services—what sort of analysis has been done on what the impact of these changes might be? We're really concerned that the impact of the changes that are happening in this bill will actually undermine the ability of future Governments to actually deliver on core public services, not even to improve them. What advice have you received specifically on the impact of the lost revenue from this tax package on future operating allowances? Thank you. Hon SIMON WATTS (Minister of Revenue): Well, thank you very much, Madam Chair. I'm just going to help the member a little bit in regards to this question, because the information is clearly available that the tax relief that we've outlined, as part of this bill, is fully funded. The tax relief is fully funded through both savings and revenue initiatives. The Government is not borrowing to fund this tax relief, so it won't have implications around inflation. So the whole premise around the point of that question is not based on the fact and the reality. The fact sheet provided with this Budget outlines a clear articulation of the annual average, both tax relief and savings, that adds up to the total cost of the package, which is circa $3.7 billion per year. CHAIRPERSON (Barbara Kuriger): I want to make it clear to those who are asking questions that we're looking for questions now, rather than speeches or assumptions, so we're really sticking to the questions. CAMILLA BELICH (Labour): Thank you, Madam Chair. I do have a lot of questions, because this is a very complex area of the bill. So, if the Minister would indulge me, I just wanted to ask a few questions around Part 4, and specifically clause 36 that replaces section RD 17(4)(c) with the low threshold amount. But in new section RD 17(4)(c)(i), they've got a secondary code of $0, and I just wanted the Minister to perhaps explain to us, as we might have been able to go through in select committee, on page 19 of the bill in clause 36 of the primary legislation, I just wondered if the Minister could just go through for the committee exactly the necessity—which I'm sure there is one, and I'm sure his officials, if he isn't aware, will be able to tell him. But I'm interested in the answer of why have new section RD 17(4)(c)(i) when it just inputs a $0 factor into the piece of legislation. So that's my first question. The next question I had is in relation to clause 37, which looks at the different tax rates of taxable income that would apply. Now, in this particular explanation of it, obviously we've got the rows and then we've got the range of dollar in taxable income. I just wanted to know from the Minister, is this a convention that we only refer to a dollar amount when we're obviously talking about a range of income? Why do we use the singular and not the plural in this instance? Is that convention or is that, in fact, an error in the bill? I'd be interested to hear that from the Minister. And you'll see in table 1 over the page that's also repeated. In relation to the employer superannuation contribution tax (ESCT) rate, I know my colleague the Hon Dr Deborah Russell had some questions in relation to ESCT. This is a tax that I am familiar with, in the past when I've employed someone and done their payroll myself, having to go through that process of obviously paying the person, paying income tax, and then also paying the additional taxes in relation to superannuation. So I'm just interested, with that ESCT rate, I understand that that has not been changed but the tax rate has been changed. And I wanted to hear from the Minister: did he receive advice on also altering the ESCT rate in line with the change of taxation thresholds or is this not something he received advice on? I want to know what the advice is. And if he didn't ask for that advice, why, in fact, he didn't and why it wasn't considered. So those are my questions for the Minister. Hon SIMON WATTS (Minister of Revenue): Well, thank you very much, Madam Chair. I'll work through these questions succinctly. The first aspect in regards to clause 36 inserting new section RD 17(4)(c)(i), in terms of secondary code at zero—I mean, it is no more complex than one starts at zero and works their way up from zero in regards to tax bands. So that is simply just articulating that point, which is very consistent with any tax bands. In regards to the employer superannuation contribution tax in clause 37(3), the thresholds are higher than the personal income tax thresholds. And the reason for this is because of the concessionary treatment that allows for the employer's contributions to be taxed at the employee's marginal tax rate. In effect, that's what you're seeing flow through in regards to that clause, and that's why it is what it is. Hon Dr DEBORAH RUSSELL (Labour): We need to probe into this difference between the personal tax thresholds, the employer superannuation contribution tax (ESCT) rates, and the fringe benefit tax rates (FBT). If we'd had a select committee process, this is exactly the question we could have gone into in some detail, because it is complicated. Now, the Minister of Revenue said in his last reply to me that the decision was made to leave the ESCT rates and the FBT rates at the same thresholds as they are at now, so there's no change in how employers are being taxed—having to pay FBT and ESCT—in comparison to what they're paying now. Here's the problem with that answer—and there's a whole series of things that flow from it—ESCT rates and FBT rates are set in comparison to personal income tax thresholds. They are very carefully calibrated to make sure that no matter whether a person is paid in cash or is paid in cash in kind, the tax paid is exactly the same. But now, we've got a difference. Because the ESCT thresholds and the FBT thresholds are not moving at the same time as the personal income tax thresholds, we have a mismatch between being paid in cash, or being paid in cash in kind. People who are paid in cash and in kind are, in effect, being overtaxed for the period from 31 July 2024 to 31 March 2025. Now, the fact is the individual employees never see that particular tax—the FBT and the ESCT—but the employer does. The explanation given, sitting in the regulatory impact statement, says that the other consequential tax type rates—portfolio investment entities, FBT, ESCT, retirement scheme contribution tax—would be adjusted from 1 April 2025. "This will allow more time to make the changes and reduce the complexity of the changes." So it reduces compliance cost. It is a straightforward trade-off between compliance costs on one hand, and paying extra tax, in comparison to personal income tax rates, on the other hand. Here's the question that flows from that: first of all, what modelling was done on how much extra FBT and ESCT employers would be paying in comparison to the personal income tax rate—not in comparison to what they're paying now, but in comparison to the personal income tax rates that apply from 31 July 2024 to 31 March 2025—in order to make the assessment that it was better to incur more compliance costs rather than pay more tax? There would have to be an assessment of how much extra FBT and ESCT was being paid. So what modelling was done to calculate that? So that's the first question. The second question is: were employers consulted? There's a choice there. Now, we've actually already got choices in the FBT system. There's a really significant choice that employers already make between a couple of methods of calculating FBT. One ends up with them paying a bit more FBT, but it's a simpler way of calculating it. So there's a straightforward trade-off there—already in the FBT system—between compliance costs and tax and the actual tax paid. But that's the employer's choice. In this case, the Government has made the choice that the employers will pay more tax rather than having more compliance costs. So instead of allowing employers to make that decision, the Government has made that decision for them. Now, I'm assuming it's going to be on good grounds, but I would like to know if the Minister consulted employers about what treatment they would prefer to have. Because in a case where there's a trade-off between compliance costs and the amount of tax paid—and it's compliance costs, so that's the cost to the individual employer, not the Government's administration costs—that should surely be the employer's choice. So there's a real problem there. So I want to know from the Minister: what modelling was done to assess the amount of extra FBT and ESCT that would be paid in comparison to personal income tax rates—as the personal income tax rates are set from 31 July 2024 to 31 March 2025—so that that assessment could be made, and were employers consulted about it? So, as already happens in the FBT system, were employers enabled to make that choice about whether they would prefer to pay more tax or prefer to incur more compliance costs? Please, Minister. CHAIRPERSON (Barbara Kuriger): Arena Williams—and just a reminder, because some people have now come into the House—and I'm not referring to this particular member, but we've had people coming in—that we're just looking for questions now, not speeches. ARENA WILLIAMS (Labour—Manurewa): Thank you, Madam Chair. I take your point and I heard your earlier ruling. You'll forgive me—this is a new a brand of inquiry and I'm struggling to not explain it, so instead I will ask the Minister of Revenue a question, but I hope he will explain to the committee what it is that I'm getting to. My question to the Minister is: what are retirement scheme contribution tax (RSCT) and resident withhold tax (RWT)? In light of the previous contributions by my colleagues about the effect of the income tax changes on employer superannuation contribution tax (ESCT) and attributed fringe benefits, there's also a flow-on effect for RSCT and to RWT, so we need the Minister to explain that to the House. Then— CHAIRPERSON (Barbara Kuriger): Can I just the member to repeat that question because the Minister was taking some advice. ARENA WILLIAMS: Absolutely. CHAIRPERSON (Barbara Kuriger): So if you could just repeat that because that was quite specific. ARENA WILLIAMS: Yeah. Two questions for you, Minister. One, what are RSCT and RWT? Two, what is the effect of making the changes that you have made without further amendment to RSCT and RWT? My third question is: given the last time a National Government proposed to make similar changes to those you have made in clause 7, amending Schedule 1 of the Income Tax Act 2007, they made the flow-on changes to ESCT, RSCT, RWT, and attributed fringe benefits, why have you chosen not to make changes to RSCT AND RWT in this bill? FRANCISCO HERNANDEZ (Green): Thank you, Madam Chair. I just want an elaboration of the Minister's answers to me about the deficit. If you'll forgive me, I'm new to this place, so I'm still learning how it all works. If the projected Government deficit is $13.4 billion, how does the Minister's assertion that there is not any borrowing for the tax cuts align with that kind of reality? Is it coming from the so-called magic money tree that members from the opposite money benches like to refer to? Is it not being borrowed? I have no idea. I have a second question as well, which relates to all the acronyms that were being thrown out here. Can you tell me what the acronym "RESPCT" stands for? CHAIRPERSON (Barbara Kuriger): I call Dr Deborah Russell, and specific to something that hasn't been answered, please. Hon Dr DEBORAH RUSSELL (Labour): I'm just going to say, Madam Chair, I do— Hon Kieran McAnulty: Point of order, Madam Chair. Thank you very much. We acknowledge your direction to the committee in terms of questions, the issue being, though, as the Hon Dr Deborah Russell pointed out, the line of inquiry she has is regarding an area that is specifically complex and her follow-up question was as a result of the response from the Minister that then drew other questions. CHAIRPERSON (Barbara Kuriger): I accept that. Hon Kieran McAnulty: But the direction that you just gave was that you're seeking questions in a different area. So what I'm seeking to clarify is: if there are follow-up questions within the same area— CHAIRPERSON (Barbara Kuriger): Follow-up questions are fine as long as they're not the same questions. Hon Kieran McAnulty: So the issue isn't so much around relevance as repetition? Fair enough. Thank you. Hon Dr DEBORAH RUSSELL: Madam Chair? CHAIRPERSON (Barbara Kuriger): The Hon Simon Watts just wants to take a call and then I'll come back to you. Hon SIMON WATTS (Minister of Revenue): I'll disregard the member's last statement, which was not a question. It was quite irrelevant. But RSCT is "retirement scheme contribution tax"; RWT is "resident withholding tax". So that's the definition around that. The question before previously around modelling and consultation—Budget secrecy, a number of restrictions around the ability to consult specifically with these impacted aspects around fringe benefit tax (FBT). But what we do know, from historic terms—and the member will no doubt be aware of that, from their prior experiences—is that any introduction of changes part year brings high degrees of complexity and compliance. That aspect is what has been the basis in regards to the decision. No specific modelling was undertaken as a result of that, but we do know from the evidence that we've seen over many, many years that part-year adjustments do bring compliance and complexity, and the sector feedback consistently is that their preference is to start the year off clean, versus doing part-year. So that's why the FBT changes are what they are. Hon Dr DEBORAH RUSSELL (Labour): I do have one other set of questions around clause 39 that I would like to go to, but to keep things straight, I just want to go back to this issue that we're really pursuing right now. I am a little surprised, to be honest, that no modelling has been done. Now, it would take a bit of time with a spreadsheet and a calculator to work out the difference in fringe benefit tax (FBT) and employer superannuation contribution tax (ESCT) that would be paid per employee given the changes in the thresholds. It could be done—and I note the bank of excellent officials there. It's a set of numbers and it could be calculated, and it could have been calculated within IRD. I take the Minister in the chair Simon Watts' point about consultation, but I notice that they did consult with payroll providers, so some consultation's good and some consultation is bad? Let's have a little think about that. I am actually genuinely serious about this, because what is happening is that employers will have to pay more tax in comparison to the personal income tax rates. This is extra tax—not in comparison to what is being paid now but in comparison to what will be paid from 31 July—being loaded on to employers. Now, I take the point about the trade-off with the complexity of the compliance costs. That is a known phenomenon, and the Minister and his officials are quite right to say that there are compliance costs there, but why was the choice not offered? That's the thing, and the Minister hasn't answered that question yet. I asked it previously and it hasn't been answered yet. In the FBT system as it stands at the moment, there are two ways of calculating fringe benefit tax: one has higher compliance costs; the other one has higher actual FBT. So we already have the concept of a choice being over to employers sitting within the FBT system. Why did the Minister not allow employers to make that choice as to whether employers wanted to incur higher compliance costs or whether employers wanted to incur higher FBT tax rates in comparison to the personal income tax rates that are in force from 31 July until next year? That is the last question I'll ask on this topic. I do have another set of questions, but I'd like to hear from the Minister on that, and then I'll go back to the one further set of questions that I would like to ask on this part. [Time expired] CHAIRPERSON (Barbara Kuriger): Perhaps if the Hon Dr Deborah Russell could ask that one more set of questions that you just referred to. Hon Dr DEBORAH RUSSELL: Oh, I'll ask the second—right. May I have a five-minute call on this? It'll take a little bit of extra. CHAIRPERSON (Barbara Kuriger): It is a five-minute call—as long as it's based on questions. Hon Dr DEBORAH RUSSELL: It is. The same thing is applying now in clause 39 of the bill, and this is the new portfolio investment entity (PIE) rate, the prescribed rates for PIE investments and retirement scheme contributions. This one's even more interesting, because what is happening, as far as I can tell, and the Minister will be able to confirm this with a nod; you might want to wait, Minister—but the rate at which tax is paid in PIEs has a series of thresholds, and for most of us on the higher rates, we get a concessionary tax rate. So if you're on the 39 percent rate, your PIE rate is, nevertheless, 28 percent; if you have a 33 percent rate, your PIE rate is 28 percent; 30 percent rate, your PIE rate is 28 percent; if your income tax rate is 17.5 percent, your PIE rate is 17.5 percent; and if your income tax rate is 10.5 percent, your PIE rate is 10.5 percent. So there's concessions at the higher end. Now, as far as I can tell, the PIE rate thresholds are not changing until 1 April next year either. That's correct? OK, I've got that correct. What that means is that low-income people who nevertheless are putting savings aside, as they would do through KiwiSaver and the like—you know, making contributions to KiwiSaver—are getting taxed at the same rate from 31 July this year until 31 March next year at the rate that applies right now. So those low-income people sitting in PIEs are not going to get the benefit of the lower rates until 1 April next year. I just wondered if the Minister could confirm that that's correct. I'm trying to read this and get my head around it. So, as far as I can tell, those PIE thresholds are not changing till then. It means that low-income investors in KiwiSaver are going to keep on paying the same rates as they are now. Now, sure, it's in comparison to the same rates as they are now, but they are not going to get the benefit of the changes to the income tax thresholds until 1 April next year. So it's not just employers who are having to pay more FBT and more ESCT in comparison to the personal income tax rates; now we have low-income investors. I think that's what it's saying. I would really appreciate it if the Minister would confirm that that is exactly what is going on. It's even more important given that those of us who are on higher incomes and are on the higher tax rates—on the 39, 33, and 30 percent marginal tax rates— Carl Bates: Is this a question or a political statement? Hon Dr DEBORAH RUSSELL: Oh, please take a call, Mr Bates. If you're interested in this, please take a call. So if I could just get that confirmation from the Minister that that's what's going on, because it does make a difference. Thank you, Minister. Hon SIMON WATTS (Minister of Revenue): Thank you very much to the member Deborah Russell for that question. The member is correct that the implications around the portfolio investment entity rates will not change until 1 April 2025, and the rationale, again, is consistent with the other concession tax rates that we've outlined today. To be more specific, the implications around that will be in regards to the managed funds entities and the compliance burden that will fall upon them. The reality is that, again, you know, this Government on this side of the House is implementing and putting in place tax relief and personal tax reductions; on that side of the House, they're opposing that. So to be talking about a concept of not having increasing tax, the status quo of the rate in which someone is paid today versus where they'll be in 2025—they're not getting over taxed; that concept is just simply not correct. And I hope the member, through the process of what we've been through in this committee of the whole House stage, may be at a point of deciding, "Actually, maybe we should support this bill, because, actually, we do want to support hard-working Kiwis with tax relief." That would be a really good outcome from this committee of the whole House stage, but I'll leave that with the member. CARL BATES (National—Whanganui): I move, That debate on this question now close. CHAIRPERSON (Barbara Kuriger): Hon Dr Deborah Russell, you said to me that you had one set of questions that was going to be relayed in your five-minute call—this is it, right? So I'm going to give you another call. Hon Dr Deborah Russell: Yep. Thank you. CHAIRPERSON (Barbara Kuriger): Thank you. Hon Dr DEBORAH RUSSELL (Labour): So I am focusing very specifically on clause 39, and I just want to express my shock at what the Minister has just said. The decision this Government has made is to ensure that low-income people, people who are on the lower tax thresholds—their marginal rates are 10.5 or 17.5 percent. The Minister has just confirmed that they are going to tax them more. That is appalling. RYAN HAMILTON (National—Hamilton East): I move, That debate on this question now close. A party vote was called for on the question, That debate on this question now close. Ayes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Noes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Motion agreed to. A party vote was called for on the question, That Part 4 be agreed to. Ayes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Noes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Part 4 agreed to. Part 5 Other amendments CHAIRPERSON (Barbara Kuriger): Members, we come to the debate on Part 5. Part 5 is the debate on clauses 40 to 44, other amendments to Tax Administration Act 1994 and Student Loan Scheme Act 2011. The question is that Part 5 stand part. Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. I thought it would be useful to provide a little bit of context in regards to the changes that are being proposed in this part of the bill because they are specific in nature, and just will be helpful in order for us to get to any questions if there are any. The research and development tax incentive, the RDTI, allows businesses undertaking eligible R & D activities to claim a 15 percent tax credit on eligible R & D expenditure. To participate in this process, a business must enrol and submit an application for approval and then file a return subsequently. Under the current status quo, if a business makes a mistake that invalidates that approval, then they will not be eligible for the R & D tax credits. One of the specific mistakes that they could make is when they have the wrong entity that is listed on the application process. Under the current legislation, there's no ability for the Commissioner to take into account a simple error and mistake and remedy that. They simply are ineligible to be able to claim that credit, which obviously doesn't sound—and nor is, in our assessment—fair and reasonable, and hence why we're proposing to make a change to ensure that if such a small number of taxpayers do make such mistakes then there is discretion by the Commissioner to make changes. FRANCISCO HERNANDEZ (Green): Thank you, Madam Chair. So just for a little bit of context, this part of the bill is something that's actually relevant to my portfolios. I'm the tertiary education spokesperson for the Green Party—something that aligns well with my student politics background. My question is around the changes to the student loan scheme that's being proposed. Are there any planned further changes that this Government is considering, and, if not, will he rule out scrapping interest free student loans for New Zealand - based borrowers? Because that's something that's really concerning to us here. The interest free student loans is a really good way to make sure that people are able to study. And the second part of my question is that, obviously, a lot of the tertiary institutions in the country are in tough times at the moment—partly induced by the COVID economic crisis and partly induced by the border shutdowns and the lack of international students. So my question around this is, has there been any analysis or modelling done on how kind of disincentivising study might affect the further viability of our tertiary institutions, like the world-class one in Dunedin called the University of Otago? Thank you. Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Madam Chair, I've got a very short, probably, question. Over here, we have been looking at clause 44, and we're actually quite perplexed, because it seems to do two quite inconsistent things. I understand how the base rate works generally—you take an average of the five year - bond rate and then you add a percentage to it. And I've got the definition of "base interest rate" from the student loan Act in front of me, and it notes that you add 0.74 of a percent to the rate to get the actual base rate. But clause 44 says, firstly, "replace '0.74' with '1.74'". That makes sense; you get a bit more money for the Government there. But then in the very next subclause it says "replace '1.74' with '0.74'", and 1.74 doesn't appear in the definition section. So unless the Minister is doing a little circle and replacing it and then unreplacing it, it actually seems to be a bit of an Alice in Wonderland nonsense provision. It may be that it's just a drafting error, because the Minister's been under a bit of pressure and this is a bit rushed and hasn't been given the scrutiny that perhaps it should have had in a select committee, but it's actually a really simple, quick question: is it a drafting error, or if it's not a drafting error, can the Minister explain where the "1.74" is in the definition in clause 41 that he's replacing with "0.74"? Because, for the life of me, I can't see it. Hon Dr MEGAN WOODS (Labour—Wigram): Thank you, Madam Chair. I just have some questions for the Minister of Revenue around the research and development (R and D) tax incentive—clauses 41, 42, and 43—in this part of the Taxation (Budget Measures) Bill. Thank you for the explanation that the Minister gave us. One of the things that I can't find in any of the documentation that's been supplied to the House is the size of the problem we're looking to solve here. Obviously, there would be instances where, as a subsidiary company that was carrying out the research activities, the tax return was filed in the name of the parent company. I'd be interested to know the number of companies where this has been in place. I noticed there is a retrospective element to these clauses as well. It is unusual for tax legislation to contain retrospective clauses. My understanding from the legislation—and I'd like the Minister to confirm and perhaps explain the rationale why—is that these actually can be corrected back to the 2021-22 tax year, which is unusual. Would the Minister, please, give us an indication of the size—what they're expecting the corrected tax returns from those tax years that have already occurred to be; also, whether or not the Minister took any further advice around the research and development tax incentive (RDTI), in terms of subsidiary companies and parent companies, in respect of eligibility, in terms of whether or not it was a multinational company that had established an R and D subsidiary here in New Zealand that was carrying out the activities—whether that has thrown up any issues. I'm interested; I was one of the Ministers that helped put together the RDTI, and these were all questions we had. So I would be interested to know. The other thing that I am interested to know is whether in any way the provisions here—any of the policy advice here—also connected to another measure that is contained in the summary of initiatives for the Budgets, albeit as a footnote. That is the scrapping of the in-year payments loan that was introduced in March 2023. That in-year payments loan on the RTDI was introduced to support smaller businesses so that they wouldn't have to wait for the end of the tax filing year to receive the revenue that they could recycle back into their business. It was a workaround, in terms of how we could get cash back into those businesses before that time. It says the temporary in-year payment loan was introduced to improve cash-flow performing businesses by providing a loan while businesses waited. The footnote goes on that it's a temporary mechanism with a permanent solution providing in-year payments. So, in preparing this amendment, I wondered whether the Minister had got further advice around what that more permanent solution would look like—what a time line for ensuring that we are supporting our smaller businesses to be able to conduct research and development activities would look like—because I think that is something that, around this House, all sides of it, all parties would agree is important; that we are supporting others than just our largest businesses to be able to conduct that most important work of innovation in the form of research and development. It says that there's administrative complexities and there's low take-up of the scheme. I wonder if the Minister could advise the committee what the take-up of that scheme was like and what any modelling, if they have done further policy work, was like—what any take-up of a more developed and more permanent scheme would look like. The Minister is quite correct in the footnote that occurs in the summary of initiatives that it was only ever intended to be temporary. So I look forward to hearing about what more permanent solutions may be put in play. Hon SIMON WATTS (Minister of Revenue): Thank you very much to the members for those questions. I'll start with the research and development tax credit question. So my officials advise me that it is less than 10 taxpayers who are potentially caught within that. The fiscal consequence of remediation for those taxpayers as a result of this change is probably less than $10 million in terms of fiscal implementation. I don't have any operational detail in terms of what the nature of those taxpayers are, but that's the scale of the size. I think the reality is that the change that we're making is sensible and pragmatic for the reality of making errors in that regard. In regards to the broader policy questions around the research and development tax credit, and the role in which it plays, you know, not confined and relevant necessarily to this aspect of the bill, but more broadly, obviously it's an area that we're having an ongoing review on because it is an important aspect in terms of our broader economic growth agenda. The question raised by the Hon Duncan Webb in regards to, I think it was, clause 44(2) and (3) in terms of the "base interest rate" definition aspects, simply there, Duncan Webb, what we're just reflecting is that the changes that we're proposing is only for five years. So, in effect, it will come in and then it will come out. When I'm saying that, I'm referring to the 1 percent increase, and hence why you've got two aspects of definition there that flow through. It allows the reality of the five-year implementation to revert back to what it is before we make that subsequent change. CAMILLA BELICH (Labour): Thank you, Madam Chair. Appreciate the opportunity to take my first call in relation to this part of this important bill. I am interested in the Minister's last response to that question about the five-year period. I know that some colleagues will have some further questions on that because I can't, for myself, see how replacing the exact same section with two different things works, and I don't see in the changes that the Minister is implementing the five-year change. I appreciate that the Income Tax Act is a complex Act, and no doubt we'll have some more questions on that, but I think it is really important that we figure out how that works. I do want to speak about student loan interest, and I do have an amendment on the Table in respect to the clauses that we were just discussing, clause 44(2), but perhaps—I don't know—depending on whether there is, in fact, some issue with that section, maybe I may need to amend my amendment. But essentially the questions I had for the Minister around the policy decision to decide to charge New Zealanders overseas with student loans additional interest, I know that having interest-free student loans in New Zealand is not a cost-neutral thing; it does cost the Government money. It's about the choices that the Government chooses to invest in. So I was just wondering why the Government decided that this particular group of borrowers who are already paying a much higher rate of interest on their student loan should in fact have a higher interest rate. So my amendment in clause 44(2) is really to try and keep a change in scope. I could have said "I don't think we should charge interest at all for overseas borrowers.", which is a policy decision. I understand why there's a distinction: because obviously we want to provide an incentive for people to come back to New Zealand. But the amendment that I've put forward is really to try and keep it in scope, but to remove the Government's proposed policy intent to add that additional 1 percent of interest. The other issue that I wanted to cover, which isn't 100 percent clear from the documentation surrounding this, is this: in fact, the increase in interest actually applies to New Zealand - based borrowers too, when they are late with their payments. This is a bit concerning, I think—in a way, possibly more concerning than the increase in interest rate compared with the overseas borrowers. That's because people who are late on their student loan payments, the reason that they would be late, I can imagine, would be due to financial hardship; due to being in a difficult financial position; due to the payments that they are required to make on their student loan once they earn above the threshold being too onerous. It's already, as I was able to research quickly, quite a high interest rate: I think for 2024/25 it was 7.3 percent—quite a high interest rate in these terms. If you were to get that type of interest rate, I think you'd be quite happy with that return, but I'm just wondering why the Government and why the Minister would decide to do that for people who are obviously in a struggling financial position. They've taken the decision to get a student loan; they've done what the Government says—and we've heard from this Government that education is the great equaliser—they've participated in education; they've got a loan. Presumably that education is benefiting both them, their family, and their community. Unable to make their student loan repayments for whatever reason. Maybe they're self-employed—often people who are in employment have regular deductions made by their employer; more unlikely to be in a position of not having to make those student loan repayments. So maybe for whatever reason, they're in financial difficulty. Why are we adding to their burden by increasing their interest rate on their student loan, when really they've done exactly what both this Government and previous Governments have wanted them to do? They've better themselves through education. There's a cost of living situation that's very tough for people at the moment and it seems to me with this change we're making matters worse. So I wondered about the advice the Minister took on that. I wondered if he could outline the policy intent for that. We know that there's tough financial considerations, but for this particular group of people, they've bettered themselves, they've taken on education, they're obviously in a tough time and we're making things harder for them. So if the Minister could explain to me the rationale for that, that would be good. Also if he could let me know, having considered those points that I raised, whether he would consider supporting my amendment to clause 44(2). Dr LAWRENCE XU-NAN (Green): Thank you, Madam Chair. Thank you for giving me the opportunity to take my first call for this part and also giving us the opportunity to speak on this part in lieu of select committee. Now, my question to the Minister is on clause 44, and particularly in combination with the explanatory note on the change to the student loan - based interest rate calculation, because we do not have any form of regulatory impact statement on this. What I want to hone in on is around the phrasing of "to partially cover the loss in value of the scheme due to recent high inflation." So the key point of my question to the Minister is around the modelling that has been done in relation to the amount of overseas and late student loans that would be collected as a part of this increase in the interest rate. So in terms of the research that I have had the opportunity to look at as our overseas New Zealander spokesperson, the fact is that over the last 10 years we have seen student debt increase. The interest rate fluctuates from anything from 2.8 percent up to 6 percent. However, in terms of the sum of the student loan that has been collected, that has not increased. What we see instead, however, is that more overseas students are struggling to pay their loan because of the interest. They have such a high interest rate that they're able to pay the interest but not the principal of that loan, to the point that in 2022—and this is something that we have to unfortunately find in a hurry, because we're under urgency—over 75 percent of overseas borrowers are overdue in terms of the payment of their loan, to the total sum of debt of possibly more than $2 billion. So, again, the question is: what modelling has been done that this is, indeed, going to be collected, rather than being a way of just simply punishing overseas New Zealanders who may be based in and working in countries where they do not earn a high enough salary to be able to pay off their student loan here, based in Aotearoa? So that is a question to the Minister. In addition, in terms of the Cabinet's own announcement by the Minister for tertiary education, who says that taken together, these initiatives are a sensible approach to tertiary education funding that reward hard-working students, but what we see here is that Inland Revenue is also moving into having more options to actually penalise these students who are going to be coming home, even for holidays or potentially if their family members are sick—penalising them and potentially even detaining them at the airport. So, again, as the overseas New Zealander spokesperson, my second question is: when this was done, has there been any consultation that was done with our New Zealanders, with our own people overseas when they decided to increase the interest rate? So my two questions are: number one, what is the modelling that was done around this that suggests that we will be able to collect more money in order to balance that loss in value of the scheme? And number two is: has there been any consultation that was done with overseas New Zealanders on the impact this will have for them in terms of the increase in the interest rate and whether that will affect their ability to come back home? Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. Unsurprisingly with a budget process, we don't consult with the public before we release the budget. So in this case we didn't consult with student loan borrowers before making the announcements yesterday, but that's no different to any budget process in that regard. The key challenge that we are reflecting here is the change in value due to the implications of inflation. We've time-bound that. We haven't made it a permanent difference. So we are going to look to reverse that back to the status quo within a five-year period. And that simply just reflects the uniqueness of both the inflationary environment and also the implications around the interest rate on that loan. And that is a scenario that we haven't seen play through historically, but it is our point of view that we do want to revert back to the status quo in that regard. I think what is interesting in a broader context—slightly outside of here, but in terms of you asked about student loan—nearly 90 percent of that outstanding student loan debt is owed by overseas borrowers. And the significance of the outstanding debt owed by taxpayers in which we inherited in October is significantly higher than where it was in 2017. And student loans are an area of which we've also seen significant growth. Hence why in the Budget we've allocated $116 million to increase enforcement and compliance to collect the money that is owed to the Government because every dollar that we don't collect is a dollar that potentially needs to be found from somewhere else. And that is the work. And within that allocation of compliance funding there is specific money ringfenced for targeting the collection of money that is owed in regards to student loans. ARENA WILLIAMS (Labour—Manurewa): Thank you, Madam Chair. This is my first call on this part, and the first opportunity to discuss Simon Watts' big new OE tax, the tax that will apply to overseas young New Zealanders who have gone off for a year to work in London in the pub, people who have gone overseas to Australia to get some work experience, someone might be continuing on with their Master's studies—they will be penalised by what the Minister has introduced in this part, Part 5 of the bill, which we are debating today. And I thank him. I thank that Minister for engaging so fulsomely with our questions today, and he has answered very helpfully to my colleague Lawrence Xu-Nan, and so he has blown that wide open for me to ask him plenty of questions about Part 5, and I will do so now. From 2025, overseas New Zealanders will be penalised and charged extra for their student loan debt because of this change, and those returning to New Zealand will face penalties at the border for just trying to come home: for visiting their mum, for coming home and seeing their friends and family, for attending a wedding—they will be stopped when they try to come into the country. There is in fact extra money for it in the Budget, for compliance enforcement costs. And why is that? I want to ask the Minister the first question I have here, which is: why is that debt, which he disclosed in his previous answers—90 percent of the outstanding student loan debt—with overseas borrowers? Is that because the enforcement powers that IRD has are not adequate to actually recover the overseas debt owed by overseas borrowers? Is the Minister aware that according to the IRD's annual report for June 2023, it received just 198 payments totalling $16,421 from overseas borrowers? Is the Minister aware that IRD cannot recover that debt from overseas borrowers, and is this a cynical measure to tell young Kiwis who have gone overseas that they are the rule breakers whilst the rest of us continue to pay and do not receive the tax relief that he says is going to occur from this saving? I want to ask the Minister: has he considered the effect on New Zealand's broader economy when we make it harder? We make it harder with these provisions for young New Zealanders who have done the work, who have trained in our universities, who have upskilled, and who have gone overseas for further work experience, to come back into New Zealand and invest in New Zealand—to make homes for themselves, to get jobs in our local economy, to bring their skills home. Is this just one more barrier to those businesses that are crying out for skilled people to get young New Zealanders back into the country? Minister, I look forward to the answers to those five questions. Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. Allow me to make a call in response to that question. Well, look, there's two aspect here at play, and we'll cover the first aspect relevant to this section of the bill, which is the increasing of the interest rate. The purpose of increasing the interest rate for a period of five years is to partially cover the loss in value of the scheme as a result of inflation. That's what we're doing, that's why we're doing it, and, as I said, it is a temporary adjustment to deal with the loss in value, and that will achieve that outcome. In regards to the second portion, on this side of the House, we make no apologies for the majority of New Zealanders who pay their taxes and do the right thing. What we have invested in in regards to increasing compliance and enforcement costs is to target those people that are not meeting their responsibilities. And we do not make any apology for the fact that if you owe money and you're not meeting your responsibilities, then the Inland Revenue will use their powers available to them to collect that money. Because guess what! A dollar that they collect is a dollar that we don't need to find from somewhere else. It's a dollar owed to this Government and it's not appropriate for the majority of Kiwis to pay their fair share and a very small element who don't to be able to get away with that. That is not the way in which we see things and that is why we're making the changes. Dr LAWRENCE XU-NAN (Green): Thank you, Madam Chair. I'm flabbergasted at the fact that we're talking about penalising our own people overseas who are trying to gain international experience—which I'm sure is something that the governing parties are interested in—and then bringing it back home. But we are now creating this barrier for them to come back home. Sometimes I do wonder about the Government's priorities. So there are two parts to this particular section. There is the first part that we're looking at, which is the increase of the rate by 1 percent for five years, which we've said, but five years makes a lot of difference. It's the difference between whether you're eligible to vote or not. For five years for the interest on the student loan for overseas New Zealanders. However, it also means there is a second part which is the increase on the late payment by 1 percent. So that's 2 percent. Now, the question to the Minister—and this is genuine. I would like to get some clarification from the Minister for those overseas New Zealanders which I have mentioned before that currently over 70 percent of overseas New Zealanders are unable to make their payment, which, again, would then become late payment. In these kind of cases, would these overseas New Zealanders get penalised by 1 additional percent as the base of their student loan payment, on top of that an extra 1 percent as part of their late payment fee? Is that going to be the case that those who are unable to pay—and that's more than 70 percent, we heard it. And the Minister has mentioned before that over 90 percent of the late payment that we're seeing right now are from overseas New Zealanders. So in these cases, when we have this incredible number of people who are unable to make their payment due to a variety of reasons I mentioned, because of the fact that maybe they are studying overseas, they are gaining their higher education overseas. I can say to you in my own profession when I was doing my masters and my PhD, I was encouraged to go overseas for my PhD because, if you want work in academia, apparently you need to have that overseas experience. And this is something that you see in academia in general. So for these people who will not be earning that much of an income—in fact, will be paying sometimes exorbitant fees overseas to international institutes in order for them to take up post-graduate education, or if they're in a precarious employment situation or they might be overseas looking after a family member so is unable to take work—are they being penalised for 1 percent of the base interest rate, and yet when they are late on their payment, being penalised by an extra percent for their late payment on top of that? So if the Minister could provide that clarification, that would be great. Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. Well, we're nearly there, aren't we? We're nearly there, aren't we? You can hear on this side of the House—hey, we are nearly there. Look, in regards to the question that was asked about payment of debt, IRD have a wide range of options available for those that are in hardship, who genuinely have the inability to pay due to their financial circumstances. We are not talking about those individuals; we are talking about those individuals who simply make decision that "I do not want to pay my student loan." For those individuals, it is absolutely fair and reasonable that there should be enforcement and compliance to ensure that the Government gets the money back that they are owed. That's what we're talking about here. The change in regards to the percentage is dealing with the value of the scheme—that's what will affect that change. But do not confuse or conflate the reality of these people that potentially are in genuine hardship cases—there are procedures and protocol around that. We are talking about a large number of people that genuinely are choosing to say, "I am not going to pay this back.". That is not appropriate and that is not taking personal responsibility for the fact that they owe this Government money. Hon BARBARA EDMONDS (Labour—Mana): Thank you, Madam Chair. I do want to ask the Minister a number of questions, both in relations to clauses 41 and 42. But, actually, since we're on student loans, I want to go back to some of, actually, the terminology that the Minister is using around the value of the loan. So I understand why the Minister wants to increase the base interest rate, for example. It's an incentive, I'm guessing, for the Minister to have those offshore borrowers to pay back the loan faster. I'm guessing that's the policy purpose of this. My question, though, as the minister refers to it as the "value of the loan"—now, that's quite a wide term. And, for student loan purposes, you can have the fair value of the loan, or you can have the impairment value of the loan, and the impairment value is, I think, what the Minister is referring to when he refers to value of the loan. An impairment value is basically how much do student loan borrowers owe the Government, how much the Government thinks they're going to collect from them, and, basically, you deduct one from the other, and that's where we come to the impairment value of the loan. Or if the Minister is actually talking about the fair value of the loan, he's talking about the total of the student loan asset book and how that sits on the Government's accounts. Just for the sake of this particular question, it would be, I would suspect, a contingent liability or a contingent asset. So my quick question to the Minister—and I'll take another call after the Minister provides me a response to this. When he refers to the value of the loan, is he talking about the fair value of the student loan, which is basically the full amount that is on the student loan books themselves, which is on the Crown accounts— James Meager: It doesn't matter; it's not in the bill. Hon BARBARA EDMONDS: —or is he talking about the impairment value of the loan? This is in relation to the bill—that the member on the other side of the House does ask—because the Minister referred to it in relation to the value of the bill, which is why he's talking about it. James Meager: Unless there's an amendment, it's not in the bill. Hon BARBARA EDMONDS: And, again, the members on the other side are saying "What has this got to do with the bill?" Well, clause 44 looks at a base interest rate increase in relation to the student loan. So if the members on the other side want to take a call as to how they want to explain "fair value" versus "impairment value", I'm happy for the other members of the House to keep going, but the interjections are actually providing me with more questions for the Minister. So I thank the other members of the House for asking and interjecting, and let's go again. Clause 44(1): "This section amends the Student Loan Scheme Act 2011." Subclause (2): "In section 4(1), definition of base interest rate, replace '0.74' with '1.74'". Now, if the member wants me to read it again, what I could do is actually look at the Student Loan Scheme Act and have a look at the base rate that's in there, or if the member would like to continue with his interjections, we can continue with my call while I'm waiting for the Minister to have a look at this, because, again, the question around the fair value of the loan and the size of it on the on the Crown's accounts is a valid question to be asking, which is why I'm asking the Minister: is this the impairment value of the loan or the fair value when he when he speaks in relation to his responses to other members on this side of the House about the value of the loan? Thank you. Hon Dr MEGAN WOODS (Labour—Wigram): Oh, it is me. Thank you—thank you, Madam Chair. I just have a follow up question for the Minister around the research and development tax incentive, and I thank the Minister for has very useful and informative answers he gave to my earlier contribution. But my question is in response to clause 43(2), and I asked the Minister about the rationale and the reasons why it is that there's a retrospective element to this clause of the bill, and the Minister hasn't answered on that. So I just would like it confirmed, 43(2)— Hon Simeon Brown: Well, only if you ask good question. Hon Dr MEGAN WOODS: I am answering questions—if you'd like to take a call, Mr Brown, I suggest you do. In terms of the retrospective element of clause 43(2), the Minister has told us there's probably only around 10 companies that are in this situation of having the wrong filing name in their return. My question for the Minister is whether he took advice on whether there were administrative fixes to this, either by officials within Inland Revenue or whether there was ministerial discretion that could be used. Because what I'm understanding: this is a legislative fix that's taking the time of the House for 10 or fewer companies—what advice he was given by officials, then what options he considered when making this policy decision? I don't disagree with what we're trying to fix. There will be companies—and only literally a handful of them—that have filed under the wrong name and should be eligible for this tax rebate, and we're fully in support of that. But just trying to understand why it was that the Minister opted to insert clause 43(2) into this legislation rather than going for an administrative fix. Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. In response to that question in regards to the considerations—absolutely, we explored all options that were available that would avoid the need to have to undertake a legislative change. But official advice through to me was clear that the only way in which this could be affected was through legislative change. We didn't have the options around administrative change or any other discretion within the commission's power. So we are where we are. We did kick the tires in regards to that to make sure that was the only pathway, because there's plenty of other things that we can be doing. But that's the reality of where we landed. To the Hon Barbara Edmonds' question in terms of the value—we are reflecting, when we talk about increasing the value of the scheme, the fair value of the scheme at a Crown accounts level. So the immediate effect of changing that will increase that value of the overarching book. Hon PRIYANCA RADHAKRISHNAN (Labour): Thank you, Madam Chair. I've got a couple of questions for the Minister around both the R & D tax incentive credit and also the student loan scheme part of this bill. Specifically to both clauses 42(2) and 43(2), with regard to the retrospectivity of this bill, I don't think the Minister's answered the question around why it applies to the years 2021-22 and onwards as well. So I was quite interested in that, as well. Also, thanks to the Minister for some of the clarification at the start of this process on Part 5. But in that, the Minister mentioned that this was one such mistake that is often made. Also, thank you for clarifying the number of companies, I guess, that have fallen into this or who have made this mistake in the past. I was wondering whether there had been any advice on other such mistakes that might be made by companies, with regard to this, and, if so, what some of the errors might have been. I was also wondering whether the Minister has received any advice on the potential of fixing some of those mistakes through this legislative process, and, if not, why not. So I'm really interested in that. But, as my colleague the Hon Dr Megan Woods has said, we don't necessarily oppose this particular change, given that it applies to a small number of companies and will actually make things potentially a little bit easier for them if a mistake has been made. With regards to clause 44, with the Student Loan Scheme Act 2011 being amended, I do agree with some of the points that have been made by colleagues on this side of the House in terms of the additional pressure that this is likely to place on overseas-based students, what the implications may be in terms of them returning. The questions that I have for the Minister with regard to this are reasonably specific. I think many of us will have people we know, whether it's friends or family members who may be in this position and are based overseas, and this "OE tax", as Arena Williams quite aptly named it, is going to affect them. So I'd be really keen to know how this change is going to be communicated to people who live overseas currently. This is going to impact them. For many, if it's a late payment, it could be because they are already struggling financially. So, firstly, how will this be communicated, given that the people who it impacts are likely to be based in various parts of the world? Secondly, what advice has the Minister received as to whether this change is actually also going to have any impact whatsoever on their behaviour? I'm sure there's been modelling done in terms of how much will be made through this. I think it's pretty clear that the five-year period is to cover increase in costs. I think the Minister's mentioned that already. But what modelling has been done on the impact of this change or this increase in cost and late payment in interest charged, and so on and so forth, on changing the behaviour of late payments? Was there any advice on that, and, if so, what could that be? Those are largely the questions that I have. I'm just really interested in some of the R & D tax incentive questions around some of those other mistakes that the Minister might have received some advice on, why those weren't, if there are any others, included in this legislative fix, and also some of that communication around the student loan. Hon BARBARA EDMONDS (Labour—Mana): Thank you, Madam Chair. The reason why I popped up to the Table was just to check if I had missed, perhaps, a regulatory impact statement for the student loan changes. So I apologise to the Minister of Revenue if there is one, but I couldn't find one on the Table. So my question carries on—now that the Minister has clarified that it's the fair value of the loan, and because there is no regulatory impact statement and I can't see the supplementary estimates on the Table—in case that it was there; maybe I should have a look afterwards. But my question for the Minister is: what is the estimated increase in the fair value of the loan as a result of this particular change in clause 44? The reason why I asked the Minister for this, and if he can provide just some information around the workings, is that the student loan valuation model does reflect current student loan policy and some macroeconomic assumptions. So, obviously, the Minister is changing some of the student loan policy by increasing the interest rate by 1 percent, and, obviously, the macroeconomic assumptions behind this will be quite different. In particular, that's because the Budget Economic and Fiscal Update yesterday set out what the macroeconomic assumptions were for the Budget, around lower productivity, unemployment, etc. But, obviously, because this is applicable for overseas borrowers, I'm just wanting to understand the macroeconomic assumptions and factors that the Minister or his officials took into account in relation to this, and what that means around the estimated increase. Because the fair value is quite sensitive to changes to a number of underlying assumptions. I know it's quite difficult to assess it, which is why it's quite a big undertaking for there to be a valuation of the student loan scheme. That valuation of the student loan scheme is actually quite an exercise for the actuary that has to do it. But some of the judgments include future income levels of overseas-based borrowers. So I'm keen to understand the Minister's reasoning as to how they got to the estimated increase, and what the assumption was around their judgments for the future income levels, the repayment behaviour. This is quite an important factor because if you're going to be increasing the base interest rate—what assumptions have they put into the estimated increase in the fair value of the scheme, given that repayment behaviour may be disincentivised for overseas-based borrowers to pay this because the interest rate has gone up and inflation, not just here in New Zealand but overseas, is higher. So what is that repayment behaviour? How does that interact when you've increased the base rate here by 1 percent—and, obviously, the macroeconomic economic factors that I've talked about such as inflation and discount rates. So I'm really keen to understand from the Minister, because there is no regulatory impact statement. It might be difficult to find it with the Supplementary Estimates. It could be an evaluation for the student loan scheme that is yet to come—and I understand that is a big undertaking by the actuaries who have to do that for the Crown accounts. What is the estimated increase in the fair value of the loan? Thank you, Minister. Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. The fair value increase as a result of the change in the interest rate is $20.5 million, and that will flow through as a result of the increase by 1 percent. Prior questions in regards to the increase in interest on loans and being referred to as a tax is simply just not the case. When you borrow money, you pay interest, and when you increase the interest rate on that loan to pay someone else, that's not a tax. So, just for clarity, a couple of the members were drawing that conclusion, and it's not one based on fact. CATHERINE WEDD (National—Tukituki): I move, That debate on this question now close. CHAIRPERSON (Maureen Pugh): I'm not going to put that question because I think there is still some detail that could be extracted, but it's getting quite thin. I call the Hon Dr Ayesha Verrall. Hon Dr AYESHA VERRALL (Labour): Thank you, Madam Chair. An area of importance to the health sector is the number of highly trained people that we have working overseas. Many of our young doctors undertake training overseas doing fellowships—as I did—in other jurisdictions in order to bolster their qualifications before ultimately coming back home to New Zealand. Just last week, we met the president of the New Zealand Medical Students' Association—she reported she had $140,000 of student loan debt before she even graduated. Now it would be normal, even desirable, for people in her situation to spend some of her training overseas, and we're learning today that additional burdens of repayment are going to be put on those young doctors. I want to ask the Minister what modelling has been done, what advice has been received, on the likelihood of our talented young people returning home when they face higher penalties in terms of student loan debt repayments should they do so? We have over a thousand, perhaps 1300, specialist vacancies in our hospitals; we have multiple junior doctor vacancies at our hospitals. That is part of what's contributing to the junior doctors being on strike at the moment—it's the high workloads that they face. So for these reasons, I want to know about any impacts on particularly strategically significant workforces that this student loan additional repayment burden is going to have. Hon SIMON WATTS (Minister of Revenue): Well, I'm glad the member Ayesha Verrall has realised that one of the opportunities that we do have is to encourage our doctors back to this country. One of the good things about the student loan scheme is that when they come back to New Zealand from overseas and have been here longer than six months, they don't pay any interest on their loan. So there's a really good incentive for the health system in terms of workforce to come back to New Zealand and to set up roots and to work here in the health system, because you won't pay any interest on your student loan when you're back home here in New Zealand. ARENA WILLIAMS (Labour—Manurewa): Thank you, Madam Chair. I'm looking forward to the Minister in the chair, Simon Watts, answering my questions about IRD's powers to recover what he has said is 90 percent of the student loan debt, and the questions of my colleague the Hon Barb Edmonds about the IRD's ability to do this and whether he has sought advice on this, because given his last answer, we must be expecting a huge uptick in IRD's ability to reclaim that debt given that in the financial year ending June 2023, they only managed to recover $16,000 of it. He must have some new tricks up his sleeve, and I'm really interested in him answering the questions that I put to him, which he hasn't answered for the committee. But I want to ask a new line of questions to the Minister. The first is: does he agree with his colleague the Hon Penny Simmonds, who said, on 30 May, "The late payment interest for overseas and New Zealand based borrowers"—and New Zealand - based borrowers—"will also increase by 1 percent." The second question, of five, I have about that is where that is in the bill. Thank you. KATIE NIMON (National—Napier): I move, That debate on this question now close. CHAIRPERSON (Maureen Pugh): The question is that debate on this question now close. Dr Lawrence Xu-Nan: Point of order. Point of order. Point of order. CHAIRPERSON (Maureen Pugh): Those of that opinion will say "Aye"; to the contrary "No". When a vote is under way, we do that in silence. Dr Lawrence Xu-Nan: I've been calling point of order, sorry, Madam Chair. It's just that we have an amendment that hasn't been mentioned at all—by my colleagues. CHAIRPERSON (Maureen Pugh): We're putting the vote now. I've heard the "Ayes". Those to the contrary, please say no. A party vote was called for on the question, That debate on this question now close. Ayes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Noes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Motion agreed to. CHAIRPERSON (Maureen Pugh): The question is that Arena Williams' tabled amendments to clause 44 be agreed to. A party vote was called for on the question, That the amendments be agreed to. Ayes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Noes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Amendments not agreed to. CHAIRPERSON (Maureen Pugh): The question is that Camilla Belich's tabled amendment to clause 44(2) be agreed to. A party vote was called for on the question, That the amendment be agreed to. Ayes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Noes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Amendment not agreed to. CHAIRPERSON (Maureen Pugh): The question is that Francisco Hernandez's amendment to delete clause 44 be agreed to. A party vote was called for on the question, That the amendment be agreed to. Ayes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Noes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Amendment not agreed to. CHAIRPERSON (Maureen Pugh): Arena Williams' tabled amendment to delete clause 44 is out of order as being the same in substance as an amendment previously not agreed. A party vote was called for on the question, That Part 5 be agreed to. Ayes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Noes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Part 5 agreed to. Clauses 1 and 2 CHAIRPERSON (Maureen Pugh): Members, we now come to the debate on clauses 1 and 2, the title and commencement. JAMES MEAGER (National—Rangitata): I move, That debate on this question now close. Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Madam Chair. I just find that extraordinary that the first thing a member of the Government can do is stand up and seek a closure without giving the Opposition so much as a look-in. It just reflects very poorly on this Government. In fact, there is a matter that I wanted to just raise with the Minister around the commencement, because the commencement, in fact, is quite a complex piece of legislation. It's quite unusual. Clause 2(7) and (8) both relate to section 44(2) of the Student Loan Scheme Act. It's a really awkward—and I actually raised this with the Minister and he sort of batted me away by saying it's about it being five years long, and I had to dig around and actually find what he meant by that. And what he actually meant—and it would have been helpful if he'd been a bit clearer—is that clause 44(2) commences on 1 April 2025 and then clause 3, in fact, which commences on 1 April 2030, which is an extremely long commencement date, has the effect of returning to the status quo ex-ante. Now, I've got a number of questions around that. The first is: why on earth—I mean, what kind of bizarre drafting is that? I know that the IRD draft its own bills, but, firstly, a commencement that is more than five years away is not good legislative practice— James Meager: OK, let's go, let's have a look at that. Hon Dr DUNCAN WEBB: No, have a look at the legislative design— Hon Members: That's a leadership tie. Hon Dr DUNCAN WEBB: Mr Meager, if you've got something to say, just stand up and take an actual call. The fact of the matter is it's very poor legislative practice to have an amendment that—and the other thing is, you know, we were genuinely perplexed by this, and it's a strange bit of drafting where you actually have to cross-refer to the commencement to understand it. And it would be very useful to have some sign-posting going on there with it. I guess the other question is: why is it that he's chosen this five-year period? In our view, on this side of the Chamber, we don't think the cost of our student loans should be increased for our overseas New Zealanders. But, at the same time, why are you time-binding it, because, in fact, it would be a much easier thing to do to manage this in a quite different way—leave it there until you need to revisit it, because it may well be that in five years' time, the rate is adequately set at 1.74, and that, in fact, the policy reasons for the change, at least in your mind, still exist. So why is it that you've got this very strange change and then repeal in the same—it's essentially a kind of sunset clause. It would have been much easier, in section 44(2), to actually sit there and say that, for five years, the rate is 1.74, after which it reverts to 0.74. That would be a much cleaner and tidier way to do it, rather than actually having this kind of circular framework there. So in terms of that commencement, I'm not sure I've ever seen anything which does an effective repeal by having two commencements for different subsections—it seems a very extraordinary way to do it. So as I take my seat, I'd be very interested to know the Minister's response to that. Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. Look, I won't indulge on why that member in particular is generally perplexed—probably something that's outside of the scope of the bill, but it probably would be worth further consideration at another point. The changes in regards to clause 2 in terms of the commencement date are as has been outlined. There are two aspects. We are making a change to bring in a change in interest rates, which will occur on 1 April 2025 in order to increase it. And then on 1 April 2030, we are then reverting back and removing that 1 percent increase. The purpose of the overarching adjustment to deal with the increase in the interest rate is to deal with the unique timing circumstance in regards to the interest rates and the inflationary environment. On this side of the House, we are hopeful and working towards a fiscally sustainable plan that will reduce inflation, and I appreciate, again, that might not have been the case on the other side, but that is what we do think, and we do believe that in five years from now, that will provide adequate time for what we're seeing in terms of a unique circumstance to no longer be the case. In regards to reducing the time of this House in the future, having that clause, in effect, revert back, avoids the need to have to come back and waste this House's time. Dr LAWRENCE XU-NAN (Green): Thank you, Madam Chair. First of all, I would like to thank the Minister of Revenue for being able to be available through this whole process. I have a question around the commencement date, and I know that we talked about it before as part of Part 5. But I want to just check in terms of the commencement date—and this is clause 2. I've got two questions. Let's start with clause 2(6), which says, "Sections 41, 42, and 43 come into force on 1 April 2021." So my question to the Minister of Revenue is, I guess, two-pronged—one and one. It's the retrospective nature of this clause coming in, and I guess No. 2 is more around the semantics of whether it is general practice for us to use a simple present tense in that case, and not a past tense—a simple past or a present perfect. So I would like to get some clarification on that from the Minister. The second question I have is around— Hon Jan Tinetti: They don't teach grammar in schools these days! Dr LAWRENCE XU-NAN: My background is in linguistics—I'm sorry! The second question is around subclauses (7) and (8). As part of Part 5, we talked about the fact that the student loans are going to be for a five-year period. I would like to have some clarification from the Minister—and, in particular, for subclause (7), where it says that it comes into force on 1 April 2025—on whether there has been any discussion or any modelling done on why that was pushed out to 2025, as opposed to 2024 or 2026 or any of the other dates. So clarification on those two points would be great. Hon Dr DEBORAH RUSSELL (Labour): Thank you, Madam Chair. I do want to speak to the commencement clause, and in particular I want to speak to this because—well, I think we really need to understand what's going on here. We had a discussion when we were on Part 4—now, Part 4 comes into force on 1 April 2025, and it's the part that contains all the measures around taxes like employer superannuation contribution tax and fringe benefit tax, and so on; compared to Part 3, which comes into force on 31 July 2024, and, of course, again, various clauses and things like that. There's all sorts of different dates floating around in this bill. I think, because of the complexity of all the different sorts of dates floating around in this bill, we had this quite extraordinary way of structuring the bill. And it really comes into close relief when you look at this commencement clause. The bill was structured in this extraordinary way, where instead of structuring it, as is usual in a tax bill, with Part 1 dealing with amendments to the Income Tax Act, and Part 2 might be the amendments to the Tax Administration Act, and Part 3 might be—all those sorts of things, which would be a pretty standard way of dealing with a tax bill, kind of thematically—this bill is structured in a way I've never seen a bill structured. It's structured according to the commencement dates. So Part 1 is all the amendments which come into force on 1 April 2024. Part 2 is all the amendments which come into force on 1 July 2024. Part 3 is 31 July 2024. Part 4 is 1 April 2025—so a really interesting set of commencement dates, and a very interesting way of structuring the bill. Now, Madam Speaker, I'm sure you've seen commencement clauses for tax bills before. You've sat in that Chair for long enough to see some tax bills go through—well, in this House certainly—and they are deeply, deeply complex clauses. Other members of the House will have seen tax bills as well. They are very, very complex clauses. I guess that's why this bill was structured that way. But I do want to ask the Minister, if the Minister could clarify, why not just the standard commencement clause that goes through and lists each part, part by part? It's an extraordinary way to structure a bill. It may be an effective one. Does the Minister intend to do this with future tax bills, or is it just that there's a particular reason for doing it with this tax bill, to have this very unusual way of structuring the bill itself? And it does, as I said earlier, become highlighted when we look at the commencement clause—so just a word from the Minister on his intentions with respect to future tax bills and why this one was done this way. TOM RUTHERFORD (National—Bay of Plenty): I move, That debate on this question now close. A party vote was called for on the question, That debate on this question now close. Ayes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Noes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Motion agreed to. CHAIRPERSON (Maureen Pugh): The question is that Arena Williams' tabled amendment to clause 1 to insert the words "OE Tax" be agreed to. A party vote was called for on the question, That the amendment be agreed to. Ayes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Noes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Amendment not agreed to. CHAIRPERSON (Maureen Pugh): Arena Williams' tabled amendment to clause 1 to insert the words "broken promises" is out of order as not being an objective description of the bill. The question is that clause 1 stand part. A party vote was called for on the question, That the clause 1 be agreed to. Ayes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Noes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Clause 1 agreed to. CHAIRPERSON (Maureen Pugh): The question is that Arena Williams' tabled amendments to clause 2 to adjust the commencement dates to 31 July 2024, 31 October 2024, 31 October 2024, 31 April 2027, and 31 July 2040 be agreed to. A party vote was called for on the question, That the amendments be agreed to. Ayes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Noes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Amendments not agreed to. CHAIRPERSON (Maureen Pugh): The question is that clause 2 stand part—I've missed an amendment to put to the vote, and I'll go back to that now. The question is that Arena Williams' tabled amendments to clause 2 to adjust the commencement dates to 1 July 2024, 1 October 2024, 1 October 2024, 1 April 2027, and 1 April 2040 be agreed to. A party vote was called for on the question, That the amendments be agreed to. Ayes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Noes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Amendments not agreed to. CHAIRPERSON (Maureen Pugh): I'll put then the last question again. The question is that clause 2 stand part. A party vote was called for on the question, That the clause 2 be agreed to. Ayes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Noes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Clause 2 agreed to. Bill to be reported without amendment. House resumed. CHAIRPERSON (Maureen Pugh): Mr Speaker, the committee has considered the Taxation (Budget Measures) Bill and reports it without amendment. I move, That the report be adopted. Motion agreed to. Report adopted. Third Reading Hon SIMON WATTS (Minister of Revenue): I move, That the Taxation (Budget Measures) Bill be now read a third time. I want to thank the members of this House for considering and debating this bill under urgency. The high cost of living is one of the most pressing issues here in New Zealand today, and we know that Kiwis are doing it tough. That is why this coalition Government has delivered this important budget bill because it delivers responsible tax relief to hard-working New Zealanders who are trying to make ends meet in the face of ever-increasing inflation. The bill is being considered under urgency because delivering that tax relief is a matter of urgency. Kiwis need support now more than ever, and we need to ensure that hard-working Kiwis are keeping more of what they earn. We are doing that by increasing the bottom three personal income tax thresholds, which will allow people to make sure they keep more of what they currently earn before moving into higher income tax brackets. Many New Zealanders have been pushed into higher tax brackets due to inflation and wage growth, meaning they have been paying and are paying more and a greater share of their income in tax. This is not fair. They earned that money and they should be able to keep more of it. A median income worker, the average rate that they are paying has increased from around 15 percent in 2011 to around 21 percent today. Tax rates that go up as income rises lower the real value of wage increases that people receive. This results in lower incentives to work, save, and invest over time. Without increasing the tax thresholds periodically, bracket creep occurs and financial incentives to work decline. It has been nearly 14 years since tax reduction has been provided, yet inflation has steamed ahead. This is not what we want for New Zealand and our hard-working Kiwis, so we need to take action to address this as a matter of urgency. That is why we are debating these changes under urgency, and that is why the personal income tax changes and threshold changes will have effect from 31 July 2024, because New Zealanders need that support now. Normally such changes would have effect from 1 April, being the beginning of the income tax year. I know that bringing that change in part way through the year may cause inconvenience to some, but Kiwis have been waiting 14 long years for this. Every day we delay people are slipping further and further back economically. So it is important for us to ensure that we deliver responsible tax relief for the squeezed middle sooner rather than later in waiting for the start of the next tax year. We are reducing the compliance costs and the administrative burden for this change by introducing some of those transitional measures outlined in the bill. The bill therefore proposes that the current tax thresholds will apply from 1 April to 30 July 2024 and the proposed thresholds will apply for the remainder of the tax year. To account for the two sets of thresholds being applicable in one tax year, the Inland Revenue Department will need to use composite rates. These are an average of the current and proposed rates and will be applied across the entire year to determine a taxpayer's annual tax liability. This will be used for Inland Revenue's end-of-year square-up calculations, which assess a taxpayer's income against the amount of tax paid over that income tax year. These changes are proposed to help reduce compliance costs associated with taxpayers in making the changes part way through the tax year. The inconvenience of making a change part way through the year is outweighed by the benefits they provide to people who are working hard to make ends meet. In making these changes to the personal income tax thresholds, we are also making consequential changes to other tax types to take into account the changes being made to the income tax thresholds. This bill therefore proposes consequential changes to the resident withholding tax, fringe benefit tax, the employer superannuation contribution tax, the retirement scheme contribution tax, and the tax on portfolio investment entity income. The bill will also restore dignity and the incentive for personal endeavour. People should always be better off in work than on the benefit, but for people on the lowest incomes that principle has been eroded. We are therefore proposing to extend the independent earner tax credit by lifting the upper income threshold from $48,000 to $70,000. This will help an additional 420,000 by $20 a fortnight. Increases are also being proposed by this Government for the Working for Families tax credits. These are the in-work tax credits which will see 160,000 families receive up to an extra $50 a fortnight and the minimum family tax credit which will see 3,000 of those families receive an extra $54 a fortnight. Together, the changes outlined in this bill will see people better off. Our tax relief package that we have outlined in this bill will increase the take-home income of 83 percent of New Zealanders aged over 15, and over 94 percent of households—1.9 million Kiwi households on average will be better off on average by $60 per fortnight. More than 3.5 million New Zealanders on average will be better off by $32 per fortnight. Family Boost will also help an estimated 100,000 families with young children. Households with children on average will be better off by $78 per fortnight. This bill will make a real difference to the people of this country. It is a bill which makes well-judged use of taxpayer's dollars. It encourages competitive enterprise and rewards hard-working Kiwis for their achievement. That is what our economy and New Zealand needs. This is an excellent taxation bill. I would like to thank colleagues in Treasury and Inland Revenue officials for all their work in providing policy advice and for drafting this bill. As the Minister of Revenue, it gives me great pleasure to commend this bill to the House. Hon Dr DEBORAH RUSSELL (Labour): This is a sneaky bill. It's a sneaky bill that, on the face of it has some tax threshold changes which will make a bit of a difference to some New Zealanders, but in the detail of the bill, as we uncovered through the committee of the whole House stage, there are some fish hooks, some wrinkles, some traps, some issues that the Minister couldn't give us the modelling for or the decisions for. I want to go through that so that people are not misled by this bill. So let's start with the changes to the tax thresholds. The Minister of Finance was at pains to tell us in recent weeks that the changes made to tax thresholds would be meaningful and would make a difference. I tell you what's meaningful: the massive job cuts that are going on across the public sector, with 5,000 people out of work. Here's what's meaningful: the families who are losing access to prescriptions because that prescription charge is going back on. Here's another thing that's meaningful: the families who are paying increased public transport costs, so that's going to eat up any changes to the tax thresholds. Here's another thing that's meaningful: these staggering increases in rates because that Government has refused to engage with meaningful water reform. People are supposed to be grateful because in the face of these stupendous increases to costs, there is a small change in the tax thresholds. I suspect that when the reality of these changes appears and the amount that comes through, perhaps in August—we couldn't be sure, because the Minister wouldn't guarantee that employers could do it—I think people are going to look at what happens in their pay packets and they're going to say, "Is that it? Is that it?" It's going to make no real difference to them. Here's why: there are the changes in the tax thresholds, but then the majority of the weight that is lifted in the alleged amounts that families will get is done by the childcare rebate. That's the biggest change that's coming through. Again, on the face of it, it looks like a good measure on the face of it. But when we dug into it during the committee stage, we found that there were all sorts of problems. We found that instead of the rebate from childcare just blowing through the system on a fairly automatic basis, families were going to have to collect receipts from childcare providers, send them into IRD, and then get a refund into their bank account in an incredibly clunky process. I recall being the mother of young children, juggling getting the kids to and from childcare while I was managing my job, managing all the juggle with my husband. It took a lot of work. Adding an administrative burden to that seems simple to those who sit in a job where all sorts of things are done for them, but for busy working families that is an administrative burden. We know it's even more of an administrative burden for our Māori families, for our Pasifika families, for our rural families. They have given with one hand but made it so difficult for the families who are going to benefit from it. Then we found out something really interesting about that childcare rebate: that it abates. When the family income is $140,000, the rebate starts to abate and then it fully abates by the time the family income is $180,000. That is an incredibly steep abatement range. What it does is it increases people's effective marginal tax rates. So I asked the Minister and I said, "What is the effective marginal tax rate for someone who perhaps earns $100,000, paying a tax rate of 33 percent at that rate, maybe has a student loan and then is going to get this childcare rebate abating as well, by the time they're at $140,000?" He couldn't tell me. He had not done the modelling on the effective marginal tax rates. It was a lazy move and it should have been done. All it would have taken is sitting an official down with a spreadsheet for an afternoon. They could have done it, but they had not done it, so we don't even know what the impact is going to be on individual earners. Let's carry on to the tax credits. So there are changes to the minimum family tax credit and the in-work tax credit. Again, on the surface it looks pretty good— Hon Member: $50. Hon Dr DEBORAH RUSSELL: —and, of course, it will help some families— SPEAKER: Look, that's enough. Hon Dr DEBORAH RUSSELL: —but there is massive fish hook in there which the Minister did not address. I refer the House back to the regulatory impact statement and the crossover between the minimum family tax credit threshold and the Working for Families abatement threshold. I'll read it out: "As the minimum family tax credit threshold increases annually, it is forecasted that on 1 April 2027 it will overlap with the Working for Families abatement threshold. This will mean that Working for Families customers will face effective marginal tax rates of well over 100 percent." That is a problem that the Minister and the members on that side of the House have not grappled with. They have set up a situation where people are going to face an effective tax rate of over 100 percent. It's a problem they need to deal with. That was a lurking problem in this bill. Then we get on to Part 4 and the changes to the fringe benefit tax (FBT), employer superannuation contribution tax (ESCT), and portfolio investment entity (PIE) rates. That was one of the sneakiest changes of all—one of the sneakiest changes of all. Those FBT and ESCT rates are set in relation to personal income tax rates. The cost is borne by the employer, but the rates are set in relation to personal income tax rates. Those changes to FBT and ESCT rates will not come into effect until 1 April next year. So from 31 July this year until 1 April next year, employers will be over-taxed on FBT and ESCT. The alleged party of business has put this in place—the alleged party of business. Then the Minister told us that this was because the compliance costs would outweigh the tax, so, in effect, the Minister, on behalf of businesses, made the decision for them. He made the decision that employers would choose to pay more tax instead of incurring more compliance costs. Here's the problem with that: in the FBT regime as it stands, there is a choice for employers. They get to choose whether or not they will pay some more compliance costs, do some more calculation, do some more work, or pay more tax. The concept of a choice is already there, but the Minister has denied that choice to businesses and he has just laid some extra tax on them. The alleged party of business has done that. I say that that is not a business-friendly move. Then there's the PIE rate, and this is the most disgusting change of all. Instead of aligning the PIE rates for low-income earners with the personal income tax thresholds, that party is going to over-tax low-income savers on their investment returns. That party is taxing our lowest paid workers more on their KiwiSaver—that is absolutely outrageous. Just to top it all off, right at the end of the bill, they whack another 1 percent on overseas student loan borrowers. Now, that might not sound like a lot, but there are already huge burdens for young people who are trying to travel, trying to work, trying to get their careers going, and now they are loading extra interest on them, putting some more costs on. That's why I say that this is a sneaky tax bill. They are touting it as offering people more money in their back pockets, but as they allegedly give with one hand, they take, take, take with the other. They undermine the way we live in New Zealand, they undermine the support we give to each other, and the worst impact of this will be on low income earners. That is an outrageous thing to do and I cannot believe that they would be proud of this. You know, we could have teased these problems out in a proper select committee process, but now we can't even address them. It is outrageous that they have done that. It's outrageous that it has been done under urgency, and it is outrageous that the time for the debate was cut short. This is an outrageous bill and the National Government should be ashamed. SPEAKER: Just before I call the member, can I remind members that this is a third reading. It's not a discussion across the House, and interjection should be as rare and reasonable as possible. CHLÖE SWARBRICK (Co-Leader—Green): E te Māngai tēnā koe, tēnā koutou e te Whare. Here's what this bill does: it gives very modest tax cuts to obscure the fundamental unfairness of our economy and our tax system. Just to lay that out and lay it there for all who may be following along at home: we had, about a year ago, a report from the IRD which told us that the top 311 families in this country hold more wealth combined than the bottom 2.5 million New Zealanders. [Interruption] SPEAKER: No, sorry. Don't mean to interrupt the member, but discussions need to be quiet and not audible. Please carry on. CHLÖE SWARBRICK: Thank you, Mr Speaker. To that effect, the subsidiary papers from both Treasury and IRD spoke to the fact that this is not an accident: it is a consequence of a tax system that sees those at the top pay an effective tax rate less than half of that of the average New Zealander. I recall a few years ago, actually, in this debating chamber, as we were debating, I believe, the introduction of the new top tax bracket at $180,000, that I had an interjection, a heckle, thrown at from the Hon Andrew Bayly who said that there is such a thing as legitimate tax avoidance. That has rung in my head every single time that we have come to debate tax in this House, because that is what we do here. We set in place rules that enable people—particularly, at present, those at the top—to arrange their affairs in such a way as to avoid paying their fair share of tax. What was one of the first things that this Government decided to do—under urgency, no less—just before Christmas? Well, it was to repeal the underlying legislation that enabled that reporting which gave us that data which showed us how unfair the tax system is. It's almost like they've got something to hide. So the question needs to be: what cost do these modest tax cuts come with? The reality is that they come at the cost of more expensive public transport across New Zealand; they come at the expense of prescription fees for New Zealanders; they come at the cost of lower-quality school lunches. If the trajectory of decisions from this Government follows conservative decisions in the past, we'll effectively be starving the school lunches programme to be able to, in future, argue that it is ineffective and then cut the funding for it. Mark my words. These tax cuts also come at the cost of cancer drugs, which the Government also campaigned and promised would be delivered, but they have decided to fund these trickle-down tax cuts instead. These tax cuts cover the cost of climate action, and I find no tiny bit of irony in the fact that the revenue Minister also happens to be the Minister of Climate Change proposing this, knowing that it comes at the cost of the integrity of the emissions trading scheme—i.e. the very system that this Government is placing all of its eggs in the basket of in order to drag down our emissions curve. It also comes—these trickle-down tax cuts— at the expense of pest-free Aotearoa. It's not too hard to fire up the shredder, but it is difficult to confront the dual crises of inequality and the climate crisis and to deal to them with evidence and the policy that is necessary to confront both of those crises. The sentiment that I have heard out there from New Zealanders—and all of us would have seen news reports—is that these tax cuts for most people: yeah, they feel better than nothing, but that they mean absolutely nothing in the face of costs going up. So this Government is also simultaneously making decisions to increase costs, notably by some of the decisions that they've made in these trickle-down tax cuts. That $2.9 billion tax cut for landlords—guess what? Our central bank says that that is only going to serve to drive up the cost of housing. We also have some analysis from Treasury that shows that this Government's decisions are going to increase the costs of rent. It's also going to come at the cost of our long-term challenges, not only the climate crisis but the $200 billion hole that we face in our infrastructure deficit. That is not even starting on the child poverty report, because I think this is a really, really important question to put across to members of the three Government parties today. I'd encourage them to look into this four-page mockery of a child poverty report and to look to the final page on page 4 where it shows us a graph—the second graph there—of after housing costs and the measure and the metric for child poverty as a result of the decisions that this Government is making, namely their tax changes; their trickle-down tax cuts. What this shows us—and I really, really, really hope that the Government members reflect on this because we all often say when we're having debates in this place that the reason that we come here is because we all apparently believe in the same things: we all apparently believe in the same values, we all apparently believe in ending child poverty, we just disagree about how to get there. What this graph bears out on page 4 of this child poverty report is that as a result of Government decisions that more children will be in poverty as a result of the Budget that they are passing and the legislation that they are passing through under urgency, of which these trickle-down tax cuts are a part. Not only that, but they've also decided to slip in increases for costs to those who go overseas with student loans in the form of their interest rates. They've also—and this is a really interesting one that was teased out through committee of the whole House—through their FamilyBoost measure, can in no way, shape, or form guarantee that the gap is not going to be filled with for-profit providers simply price gouging. I'd also note that, ACT Party members: your deputy leader decided to, throughout the election campaign, rail against this FamilyBoost policy for exactly that same reason. That can be found in the media archives. Mr Speaker, 63,000 New Zealand children woke up in poverty today. What these trickle-down tax cuts are going to do amidst the backdrop of a Budget which continues to entrench a deeply unfair and unequal economy is make more children poor. I find it really interesting as well, if we flick through to page 2 of this incredibly light child poverty report: it says here in the second paragraph under the Government's approach to child poverty, a key driver of child poverty is living in a benefit-dependent home. Causation is not correlation and correlation is not causation. Indeed, there absolutely is a correlation between the fact that children living in poverty do overwhelmingly live in benefit households. But the reality of the situation is that the reason that those children are in poverty is because we force those in benefits to live in poverty. So I'd just asks us to unpack, actually, the very notion of child poverty, which is a really interesting rhetorical device used by those in the social sector to campaign for our country to care about poverty as an issue. Because it just so happens to be the case that we don't tend to empathise with adults in poverty; it seems to be contrary to the notion of the hard-working New Zealander—every politician's favourite voter—because it is the case that we are quite comfortable in this place, under successive Governments, punching down and blaming people for living below the poverty line. At the end of the day, all this Taxation (Budget Measures) Bill delivers for us is trickle-down tax cuts that continue to entrench a deeply unfair and deeply unequal society and economy, which the Government knows and has the data and the evidence—that they promised us they would care about—will put more children in this country into poverty as a result of their decisions. Frankly, I think that that is something to be ashamed of. I would also reflect on the fact that the finance Minister, in many of the papers released alongside the Budget, cherry-picked statements from the IMF and the OECD in order to rationalise Budget decisions. But she intentionally neglected the top-line ask—the plea—from both of those international entities for our Government and our country to sort out our tax system; to finally, once and for all, put a tax on capital gains so that we level the playing field, so that we stop seeing money ploughed into unproductive assets, namely housing. Unfortunately, what we see here today in this Budget from this Government is no ambition, no aspiration, next to no meaningful evidence base for anything that they're doing. In fact, if they were to look at the evidence, they'd see that it's making those in this country far worse off. For that reason, the Greens cannot support it. TODD STEPHENSON (ACT): Thank you, Mr Speaker. I rise to talk to the Taxation (Budget Measures) Bill. Firstly, before I talk about the bill, I just do want to congratulate the Hon Nicola Willis on handing down the Budget. This is my first opportunity to speak since the Budget was delivered yesterday. I do want to congratulate her on delivering the Budget and working constructively across the coalition to actually put it together. I also want to acknowledge my leader, actually, one of the Associate Ministers, David Seymour. I know he diligently worked on the Budget, particularly around the savings measures. These tax cuts that we're going to talk about have been made possible by actually doing a line-by-line review of Government spending, and taking out a lot of waste. So I think that Kiwis wanted us to make sure that the Government is actually spending money on things that can deliver outcomes, getting rid of wasteful spending, and that's what this coalition has done. I know Mr Seymour has done his part in delivering that. We're very happy, in ACT, to be supporting these tax changes. As Minister Watts said earlier, it's been 14 years since we've delivered any tax relief in this country. There's this handy little brochure here which actually points out that 83 percent of New Zealanders will benefit from the changes that we are going to pass today. Rather than being trickle-down, this is actually direct tax relief. People are getting to keep more of the money that they work hard for every day—they're going to keep more of that. It is true that ACT actually had some different tax proposals. We would have probably liked to have seen a simpler tax system. But this is heading in the right direction. I want to also acknowledge the finance Minister did acknowledge that ACT has other proposals, and we're going to continue to work constructively in Government to have those proposals worked on, and we will be continuing to execute that. I want to refer to a couple of things that have transpired in the debate. Chlöe Swarbrick talked a lot about a few things. One was interest deductibility and unrealised gains. My colleague Andrew Hoggard is an economist and he's very happy to sit down with Ms Swarbrick and talk about what unrealised gains are and why it is inappropriate to actually do a calculation on those, and also how interest deductibility works and why that is an appropriate business expense. I also want to address the Hon Deborah Russell. I actually agree with the Hon Deborah Russell on something. A lot of acronyms have been thrown around—FBT, PIE, the IETC; lots of acronyms. The Hon Deborah Russell is right: our tax system should be simpler. We shouldn't need all these acronyms. We shouldn't need all these carve-outs. There should be a simpler tax system. Again, we're happy to work with the Hon Deborah Russell, exploring that as ACT's proposals continue to percolate through the Government. In the meantime, I just want to finish by saying that this is going to give some relief to the cost of living pressures that Kiwis are facing. It's going to return some money to the back pockets of Kiwis. We're also attacking Government spending, which, again, is going to bring pressure down and we're going to see this economy turned around, more people in jobs, growth, and that's what we're about in ACT. We want to grow the economy so that every Kiwi has a great opportunity to grow up, earning the kind of income they want, doing the kind of job they want, raising the family the way that they want, and actually contributing to our society. So I commend this bill to the House. TANYA UNKOVICH (NZ First): Once again, I rise on behalf of New Zealand First in support of the Taxation (Budget Measures) Bill, and I'm going to keep it brief. This bill is going to make a difference in the lives of many hard-working New Zealanders, and that is why we will continue to deliver on what we campaigned on. That is why I'm very happy to commend it to the House. Thank you. Hon Dr Duncan Webb: I seek the Māori Party call, Mr Speaker. SPEAKER: Just one moment—thanks very much for your advice, but I'm in the middle of ruling, so if you just let me do that before you offer your opinion, I think we'll make better progress. So we have a similar split in the 10th call, which is Labour and National speaking; it's Labour and Te Pāti Māori on this one. I think if we were to say that if Labour swapped in this place with Te Pāti Māori and took a 10-minute call now, that would most likely leave a 10-minute call for National at 10. So, with a 10-minute call—and I hope this doesn't prove too difficult or too much strain, but I'll call on the Hon Dr— Ricardo Menéndez March: Point of order. Just confirming that the sixth slot will still be a split call with the Green Party having a five-minute second call. SPEAKER: No, the Green Party doesn't—oh, the Green Party has the sixth one. Oh, I see the problem. OK, in that case, the Green Party should've taken the first five minutes in this. So, look, it's messy because the party hasn't got a representative here for a speaker at the moment—and that's not implied criticism or otherwise. I think, in that case, we'll take a five-minute call from Ricardo Menéndez March. RICARDO MENÉNDEZ MARCH (Green): Thank you, Mr Speaker. This bill, the Taxation (Budget Measures) Bill, has been called sneaky by some, and I think actually it goes beyond being sneaky; it's a bill that it is cruel, and it speaks to the values of the National Party and its coalition partners. This is a trickledown bill that ignores those doing it the toughest, that gives cake for those at the top and breadcrumbs for everyone else, and people deserve far more than those breadcrumbs. We should not settle for people having a handful more dollars each week when we know we can make it a political reality to ensure that everyone can live well and not in poverty. It was really telling in this third reading debate when the Minister, the Hon Simon Watts, talked about hard-working Kiwis as the people who this bill was targeting, but, actually, some of the people least benefiting from this bill and, in fact, left out entirely in portions of this bill are caregivers who do caregiving full-time, who won't be receiving the boost to a bunch of income top-ups such as the in-work tax credit, for example, because this Government, and successive Governments, have determined that full-time caregivers are not doing so-called work. The Green Party says an end to this nonsense argument that caregivers are not doing work. Caregiving is work. And it's time for the Government to stop putting it about to all the labour that comes across our economy that actually sustains all of us and yet is not considered important because it is not under an employment agreement. Caregiving, volunteering—and the reality that people deserve the dignity of living well. This bill has to be taken in the context of the cuts to all the other subsidies that will make life more expensive. The reality is that this bill is coming in the context of subsidies for transport being ended, resulting in higher transport fares for people; an end to the subsidies for prescriptions, which will make access to medicines more expensive. It comes with the introduction of greater powers for landlords that will make it easier to evict people, putting people into situations where they'll need to access emergency housing in distress. So, while they may be celebrating the breadcrumbs that they've thrown out to our communities, they're also making life more expensive for the majority of people. But it is absolutely no surprise. This Government never claimed to be on the side of the many. They've made it abundantly clear that they're here for the wealthy few. And the Green Party will continue fighting to ensure that we have a Government that makes the tough political choices to actually end poverty, to tackle the climate crisis, and deal with our biodiversity crisis. The Prime Minister is not right when he talks about the decisions in this Budget being tough. In fact, they just continue what successive Governments have done, which is to enable inequality to continue to increase. We've seen report after report showing how child poverty measures will stagnate—that this Government isn't taking the tough choice of ending poverty once and for all. And my colleague Chlöe Swarbrick was right in calling out the nonsense from Government reports that talk about how one of the key determinants of child poverty is living in a household that relies on a benefit, because it is a political decision to set those benefits below the poverty line. People did not grow up in poverty out of inertia. They grew up in poverty because the Government and successive Governments of blue and red stripes have set benefit levels way below the poverty line. They refuse to tax the wealthy few to ensure that we can lift people out of poverty and have refused to recognise the inherent right that people have to a life with dignity. This Government has also turned its back on disabled people, many who live on income support, many who will be some of the least proportionately benefiting groups out of these tax cuts. The reality is that you can't fund Whaikaha and then on the other hand remove supplements to minimum wage extensions and exclude disabled people on income support from many of the elements of this bill. Our communities deserve far more than a Government willing to hand the future to those already doing it well and the wealthy few. We deserve a Government that is committed to making the tough choices of ending poverty, tackling the climate crisis, and not continuing with this proven trickledown economics that has only increased inequality and made life worse for the majority of people. SPEAKER: Just before I call the next member, we have a situation where a party has indicated they wish to share a split call. That is allowed, except that it is on the basis that it is notified. It wasn't notified. So, in order to maintain a degree of fairness about that, we will have the splits as they are determined already, excepting that the Māori Party call on this split goes to the Hon Dr Duncan Webb. Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you for the indulgence, Mr Speaker. This Taxation (Budget Measures) Bill is a centrepiece of this Government's Budget. What it amounts to is a borrow-and-burn Budget. These tax measures are costing the Government $3.6 billion. Where's it coming from? Where is the $3.6 billion coming from? This Government is now borrowing—borrowing—more money than any other Government before. The debt—there's going to be $9.2 billion in financing costs. The suggestion that this Government is not borrowing for its tax package is absolutely laughable. There are two sides of the ledger: one of them has got "borrowing" on them, one of them has got this tax package on the other. The $3.2 billion has to come from somewhere. If you didn't spend $3.2 billion on this tax package, that's $3.2 billion that you wouldn't have to spend. We know what's going to happen. I've seen the Minister of Finance say with a straight face, an expressionless face, that this won't be inflationary. But the fact is that when you put $3.2 billion into the economy, it is going to be spent. That is economic vandalism. That is borrowing and burning. What's more, they say, "Don't worry, we've found money. Somehow, we've magicked up some money by doing things like cutting unnecessary programmes."—stealing from the climate fund. You know, the country is burning, and you've just thrown some gasoline on it. It's absolutely outrageous. "Oh, we've found something to cut. Let's take a sandwich out of the kids' school lunches." You know, that's basically what they've done. Those school lunches—I hope everyone in this House has gone and seen them—are good, healthy, balanced lunches with a with a range of food. Not anymore. It's going to be a Marmite sandwich. That's not a healthy school lunch— Carl Bates: My kids love them. A good Marmite sandwich—my kids love them. Hon Dr DUNCAN WEBB: His kids love them—that's what we've got. You know, that's great for you, but what I aspire to is giving kids lunches which are fully rounded and nourishing. And this Government is cutting lunches in half. [Interruption] SPEAKER: Yeah—that's enough. Just carry on; we'll just have a bit of quiet. Thank you. Hon Dr DUNCAN WEBB: And of course, free prescriptions. This is how he finds money—a mostly five buck surcharge. Those members—that Government—wants to cut that five buck surcharge knowing that our most needy New Zealanders will walk past the pharmacy because they haven't got the five bucks to pay for their medicine, to pay for their antibiotics for their lung infection, to pay for their pain medication—all of those things that not only make their lives better but also make them less costly to the New Zealand Government in the long run. So I am surprised and appalled that that is the approach being taken. Chlöe Swarbrick made a good point. Child poverty indicators—if you have a look at the child poverty report that came out, which is premised on this Budget and these tax measures, the child poverty measures are going up. Child poverty is increasing. That is the choice that this Government is making—that children will be in material hardship. They choose that because they want to buy some lollies with the grocery money, effectively. They want a sugar hit, and that's what they've done with this tax package. We know what child poverty leads to—we know. There's actually a reason why they're spending hundreds of millions of dollars building prison beds whilst child poverty is going up—because the two things are linked. So this is a Budget which isn't fiscally responsible, which is needlessly increasing debt, which is inflationary, but what is worse is that it's harmful to our most vulnerable New Zealanders. It's a shameful Budget, and it's a dark day where I stand here and watch that Government vote in favour of it. Thank you, Mr, Speaker. STUART SMITH (National—Kaikōura): Thank you, Mr Speaker. As the nearly quarter of a million hits on the tax calculator website have shown today, Kiwis are very eager to see this Taxation (Budget Measures) Bill be passed. So it's with great satisfaction that I commend it to the House. Hon Dr AYESHA VERRALL (Labour): It's a pleasure to—[Interruption] SPEAKER: Sorry, before you start—we'll start you again. Look, as I said earlier, this is not a conversation—rare interjections only. I call on the Hon Dr Ayesha Verrall. Hon Dr AYESHA VERRALL: Mr Speaker, thank you. It's a pleasure to follow that fulsome contribution from the chair of the Finance and Expenditure Committee. This bill enacts elements of the Budget that takes New Zealand backwards. It borrows billions for the tax cuts that are contained in this bill. The tax threshold changes will result in far less for New Zealand families than was promised. The question that all New Zealanders are asking today was answered by Andrea Vance in The Post. The question was, "Was it worth it?" She says, "For a pensioner couple, getting $4.50 a week … probably not. The minimum wage earner pocketing 30 cents, surely not. The singleton, earning $55,000 a year, receiving $51 a fortnight, arguably no. [For] The patients relying on funding for 13 new cancer drugs, almost certainly not. And for future generations saddled with $50 billion of debt, definitely no." It is clear that many things that are good about life in New Zealand are being sacrificed on the altar of saving Nicola Willis' political credibility because she committed to tax cuts. Commentary in the New Zealand Herald today says, "There is absolutely no doubt"—says Matthew Hooton—"no doubt that New Zealand is borrowing for tax cuts." I want to touch on whether or not this is worth it, and I want to focus on one particular policy initiative: the free prescriptions. Now, that was a policy brought in at last Budget that had tremendous impact in New Zealand keeping people out of hospital, making sure that the many people who have to forgo their medicine because they cannot afford it, who otherwise end up in hospital for treatment, can get the treatment they need. There are many people who need multiple prescriptions at a time and they depend on that support. The pre-election promise from the Government was that that policy would be used to fund cancer medicines. But what happened doesn't add up. No, they've scrapped the free prescriptions and they've also not followed through on the cancer medicine treatment. Another area: free public transport support for working families has been lost. That contributed quite a bit—it can add up to about $25 a week for some families when they've got kids who were getting the free public transport subsidy. That was meaningful impact on the cost of living. Similarly, people's hope for the better future, for being able to purchase their first home, lost with the cancellation of the First Home Grant. So it seems that this Government is taking with one hand and giving a few scraps in return, and certainly no meaningful action for those that they call the squeezed middle. But there's more to what's lost in this Budget than just the ins and outs on the daily budget sheet for the average family—there's also the services that many New Zealanders depend on. This Budget was funded in part by the loss of 5,000 jobs across New Zealand's Public Service. Health: we've lost the people who monitor whether our health system is doing a good job or not, we've lost the people who will be there to protect us in the next pandemic, we've lost advice, and we've lost people who work on regulation—things like protecting kids from vaping—and on and on and on. In education, people who see if those school lunches are in fact nutritious—they might provide some inconvenient advice—they've been fired. People who protect the borders of our communities and Customs, keeping meth and other drugs out of our country, and people who keep harmful pathogens out of the community at biosecurity—they've been fired in order to fund the tax measures in this bill. At Oranga Tamariki, the people who make sure that the management of children are supported by good legal advice when they're in State care—they've been laid off. There's been lay-offs at ACC, the agency that helps New Zealanders rebuild their life after an accident—in particular, people at ACC in the injury prevention unit have been fired, meaning that the overall efficiency of the of the programme is reduced. In the Ministry of Social Development, people have been fired to fund these tax cuts—they're often the ones transforming the systems that people interface with when they go to get their entitlement. Department of Conservation funding has received a real cut as well as a result of these changes to the tax thresholds, where the only people celebrating are not people, they're ferrets, because it's a great day for pests in New Zealand given all the cutbacks that we're having to the measures to preserve our environment. The childcare rebate is a poorly designed piece of policy, though the intent to make sure that parents have support when they're having their children in care is a good one. The requirement to mean that parents have to pay for their care upfront will be a barrier to many on the lowest incomes accessing the support that is intended to be provided by this bill. It's a few years since I was a parent of a preschooler, but I remember well the lack of time to do anything for myself, the sleep deprivation, the overwhelm, the household work, the piles of washing, the relationship difficulties that you have when you're managing all this extra work in your household and your career commitments. Yet the Government decides it's helping to put a little bit more of red tape and admin in the way of those families as they try and access support. I don't know why they would design a policy like this in the modern world. Finally, I want to talk about the changes to the student loans. And this is where the bill gets truly, truly sneaky. This was not canvassed in the run up to the election that this type of a change would be made. But it is of a piece with the type of initiative that this Government has sought to bring forward to tax people who are not New Zealanders, or at least not in New Zealand. We know that the foreign buyers tax was the Government's first effort to raise revenue of people overseas, but that was scotched by New Zealand First. The international visitor levy is another one where they're trying to put more costs on people coming to New Zealand. And this one has snuck through: the student loan increase in repayments for New Zealanders overseas. Now, this one is on New Zealanders who are overseas who are having to pay back their student loans. For some, it will cause additional hardship and it may well cause our well-trained people not to return to New Zealand. When I think about the situation in our health system where it's normal for many of our well-trained people to go do a fellowship overseas, get the skills they need, and come back to New Zealand—they'll be facing additional costs as they seek to do that, and then the barrier to returning to New Zealand where we can use their skills seems even higher. I think this is a concern that that side of the House should take more seriously as we face the highest ever level of immigration from this country. In the last year, 52,000 New Zealanders went overseas; 39 percent of them are aged 18 to 30—precisely the people who would be impacted by this. We know that they'll be looking around, looking at the rising projections for unemployment in New Zealand; seeing the country they love go backwards on climate, backwards on race relations; a Government that likes to kick trans kids in the face every now and then if it suits them politically; challenges in homeownership in this country; and putting an additional burden on them in their student loan repayments. What positive agenda does this Government have for those New Zealanders who we would like to return to New Zealand! So this is a broken promises Budget. We all remember Christopher Luxon in the leaders' debate saying that New Zealanders will get $250 a fortnight with the tax changes. Well, this bill shows that it is barely anywhere near that for the majority of families. It shows very little happening for the squeezed middle, and, in fact, there are more costs being put on to people as free prescriptions and public transport subsidies are rolled back. Also, for seniors—I mean, it was incredible how short the New Zealand First seniors spokesperson's call was, given that it must be of some embarrassment that seniors will only get $4 a week with these— Arena Williams: $2.20! Hon Dr AYESHA VERRALL: $2 each a week. This is a broken promises Budget. This bill does nothing to take New Zealand forward; it takes New Zealand backwards. I cannot commend this bill to the House. CATHERINE WEDD (National—Tukituki): I rise to support this bill because it is all about supporting hard-working New Zealanders to keep more of what they earn. After 14 years, they will finally be getting tax relief on 31 July. So I commend this bill to the House. SPEAKER: I call the Hon Peeni Henare for a split call. Hon PEENI HENARE (Labour): Tēnā koe, Mr Speaker, and thank you for the opportunity. I just wanted to address one thing: there are a number of grumbles in the House about some of our colleagues who haven't been here through the debate. I just wanted to acknowledge this morning the passing of Rawiri Waititi's father, which is a sad time for him; he's lost both his parents now in the last six months. So I want to acknowledge him; he will be returning to his marae, Kauaetangohia, in the coming 24 hours. So I just wanted to farewell him. Haere e te matua. Haere, haere, haere. Now back to our bill that we have in front of us here today. I stand in Opposition to this bill. You know, I don't claim to be a tax expert. But most of our whānau out there just want to know the simple things. They want to know: will they be able to get ahead? They want to know: is the cost of living going to ease so that they can support their families? They want to know that systems are simple in order for them to get on with their daily lives so they can be productive. What I've heard throughout this entire debate, and it was a robust debate—and I want to acknowledge the speakers on this side of the House, in particular, who went through this with a fine tooth comb and challenged the Minister on so many aspects, and couldn't get an answer. So let's paint it quite clear. For our whānau out there, what's happening today is the tax threshold changes. Everyone has said, on that side of the House, that you're going to be better off. Well, what's clear to me, and as I look through those threshold rates, I look and see who's really missing out. Well, I can tell you, and the regulatory impact statement supports this: Māori are missing out. Pacific peoples are missing out. Families in low socioeconomic communities are missing out. They are the ones who need it the most. They need the support the most, and what we've heard throughout this entire debate is that that support is being stripped away, but that's OK because we're going to give you a pittance in your pocket. Not only that, though: what I heard in particular on that part of the debate was "Oh no, that's all right. We're going to give it back to you but you have to work for it again. You've got to go through the administration of making sure you can get a rebate for a child." Now, that's just absolutely ludicrous and absurd. And I heard some of those kōrero from the other side of the House, saying, "Oh, well, you know, if they want it badly enough, they'll go and do it." This is to my point. Our people want to know that the tax system is simple, easy to understand, so they can get on with their daily lives. That's not what's happening here in this bill. We also talked about a number of other reasons why people are leaving this country. Well, I say, "Gidday, mate!", because a lot of our people are leaving this country simply because the cost of living burden is just far too great. And what was advertised in the entire election was that relief was going to be given to them, they'll have more in their pocket, they'll have more to spend in our local economies, they'll be able to stay here and support their families. Well, record numbers are going to Australia, record numbers are heading to greener pastures so that they can get the necessities of life: better healthcare, better support in education, better support for their families. This bill does not do that for our families out there. It might do it for the privileged, the wealthy few, it does it for the people at the top of the ladder, but it does not do it for the people who need it the most, and that's the point that I need families out there in our communities, our hard-working families, to get through tonight. That is, it does not support them. When the tax thresholds come into enforcement, they're going to look at their pay packet and say, "Well, is that all? Was that worth it? Did we make the right choice at the election?" My point to them is, well, sadly, the election was the election. But they get a choice again in the future. They get to choose whether or not they back better education outcomes, they get to choose whether or not the cost of living crisis will be eased so that they can look after their families and they can do all the aspirational stuff that we talk about in this House, where, at the moment, they've been stripped of that aspiration. They'll have a choice to make in the coming years, and I encourage them to have a good hard look at what's in this bill, have a good hard look at what was left to them at the end of the day, in their back pocket, and I'll remind them that it was bugger all. And when they've been given a little bit, as my colleague has rightly said, they've been given a little something with one hand and I can say that they've been punched in the puku with the other, because you might get a little bit more in the pocket, but you've got to pay more because subsidies for transport have gone, you've got to pay more because healthcare's going up, and that's just not good enough. The community aren't silly; they'll see this bill for what it is. They'll see this tax movement from this Government and what it's for, and they'll make a better decision into the future. RYAN HAMILTON (National—Hamilton East): It's really challenging, while we listen to the drivel from the other side that's been there for six years; and I'm so glad we're bringing back reading, writing, and maths, because there's one thing they don't seem to understand: you don't borrow to fund tax cuts. You let people keep more of their own money. I know they think it's funny. It's ironic. Actually, it's about reducing your spending. It's something you didn't learn, and that's why you're now in Opposition. And while the member Chlöe Swarbrick yelled at us for nine minutes in her debate, she didn't properly read the regulatory impact statement from the Inland Revenue Department which says it is estimated that the tax package, which includes a $25 increase to the in-work tax credit, will reduce child poverty by around 14,000 plus or minus 6,000—so that's 20,000 to 12,000 children. We're reducing child poverty. So maybe it's time that you went back to school and did your own reading, writing, and maths. I commend this bill to the House. Hon KIERAN McANULTY (Labour): Thank you very much, Mr Speaker. If this Budget was so good and if it really delivered what the Government is saying it is, don't you think they'd want to speak for a bit longer than a minute and a half to talk about it? But they don't, because right throughout this debate—the first reading, the second reading, and the committee stage—all their claims have been unravelled. You know, the rules of Parliament are quite restrictive, and there are certain words that you cannot use. You can, however, use a combination of words to describe things. There is a word for when people say one thing and do another, there's also a word for saying something that isn't true, and there's also a word for saying something and then ignoring that and then not doing that thing, and all of those situations have occurred in this Budget. What summed it up quite nicely was that very brief contribution there, from Ryan Hamilton, that said that you can't borrow to give tax cuts. Well, you can, because that's what they've done. What they have done is they have committed to tax cuts which, in turn, have reduced the Government's revenue, and then borrowed to fill the gap. They have borrowed for tax cuts, despite the fact that in their Budget at a Glance, it says, "Tax relief is fully funded,". But it's not. If there was the equivalent of the Advertising Standards Authority here, this should be reported because it is not telling it as it actually is, and there is no greater example of how this Government has let New Zealanders down than in housing. This Government has decided that instead of helping first-home buyers over that line to produce a deposit to buy their first home, it is a better and more pressing priority to do a $2.9 billion tax cut for landlords. In addition to that, this Government has said that it is a bigger priority for them to reduce the brightline test, which will ultimately see houses bought and flicked on much quicker than they would have done otherwise. A really interesting piece of information that came from the Government's own analysis said that a combination of those two polices—the $2.9 billion tax cut for landlords and reducing the brightline test—will mean that rents will go up quicker and longer, and this is the Government that promised to bring down rents. Now, what was I talking about earlier, about saying something that isn't actually the case and knowing that that's the case? For months, throughout the election campaign and at question time after question time after question time, the Prime Minister sat in that seat there and said to the House and said to the people of New Zealand that the tax cut for landlords would drive rents down. He knows that's not the case, and now the Government's own analysis says so. How can Government members stand up for 90 seconds or, in some cases, for quicker than a minute and say that this is a good deal for New Zealanders when they know that it's not? The piddly, small amount that many, many, many New Zealanders are getting out of these tax cuts will not compensate for the additional costs that they are bearing. It will not compensate for the increase in rents and it will not compensate for the increase in insurance, nor will it compensate for the increase in rates, and every time that ratepayers open their bills and see a rates increase that they did not expect, they can lay the blame squarely on the Government. Even the Government's own advice says that by repealing the water reforms, that has imposed an undue burden on councils, who simply cannot do it by themselves. Their own advice said that repealing the water reform would cause a significant increase in rates, and later on in urgency, we'll be debating a bill that does absolutely nothing to reduce rates. It fiddles around with processes to make things that can already happen happen quicker, but it does not in any way deliver lower rates for ratepayers, and that is the thing that is stinging Kiwis the most. It is a massive driver of inflation at the moment, and it's not just ratepayers; it's renters as well, because, of course, if the costs on landlords and ratepayers go up, so too do rents. This is a fact. It is in their own advice, and it is disingenuous, to say the least, to stand up and crow about how much this Budget is delivering for New Zealanders when many New Zealanders are facing costs that will be far higher than the tax cuts that they receive. In addition to the increased cost of rents and rates, the housing issue continues. This Government—and this is something that hasn't been spoken about, and I'd be really interested on their thoughts. Perhaps if they'd contributed to the full time allocated, we might have been able to hear about this. A billion dollars: remember that—it's a lot of money. A billion dollars they have removed from the maintenance budget of Kāinga Ora—$1 billion—because they want to do what they did last time, and that's run down Kāinga Ora and then say, "See? The Government shouldn't be involved in the provision of State housing. We may as well flick 'em off." It's what happened last time and it's what's happening this time, and the fact is that in the Budget, in order, in part, to pay for tax cuts, they have taken $1 billion out of the maintenance budget for Kāinga Ora. The question I have for the members is this. Is a leaky roof still considered a roof over the family that is vulnerable and that needs housing, because, obviously, that is exactly where it is going, and it demonstrates, yet again, that this Government doesn't care about those that need it. They've made the wrong choices and they've got the wrong priorities. When it comes to saying that they would do one thing and then not do something, there is no greater example than their promising vulnerable families who are facing an untimely and early departure of their family members who are suffering from cancer that they, if in Government, would fund prescribed cancer medication. They broke that promise—they broke that promise. They misled New Zealanders. They said they were going to do something that they simply could not do, and then they have the gall to turn around and try and blame us. I couldn't believe it. The finance Minister was trying today, when she's come under the pump—it's quite clear that the message has hit home with the Government that this is a step too far for New Zealanders. To promise people that they would fund cancer medications when they knew they could never do it and they had no intention of doing it—and there are people that voted for that Government solely on that policy—and then to turn around and try and blame us. It was a cynical move, and if there was any credibility left in the finance Minister, it disappeared today, when she made that claim. It is disgraceful. They should own it. They misled New Zealanders. They promised something that they knew they couldn't deliver, they had no intention of delivering it—because they can't; it's not how Pharmac works—and here they are, turning around, and saying, "Oops, sorry. But, by the way, let's blame Labour." Nah—sorry, that's not going to wash. If you're going to campaign on something so personal as funding cancer medications for people who are desperate to get as much assistance as they possibly can and who then vote for you on that basis, own it. That was a choice that this Government made. They turned their backs on those people and they should own it, and instead of standing up for 60 seconds or 90 seconds and saying how great this Government is, how about those members using the time to tell those people why they made that choice? That would be the honourable thing to do—stand up and defend the decisions that they've made. Defend the decision to back landlords and those that are wealthy, instead of following on the promises that they made on funding cancer medications, and the best that they can come up with—the best they can come up with—is to tell me, "You're running out of time." That's it, and I think that speaks volumes. They've been confronted with the truth and they don't like it. Well, it's not just us that's going to confront them with it. They're going home on Monday afternoon, when this urgency finishes, and they have to face their constituents. I'd rather be us. NANCY LU (National): A majority of average-income Kiwi households will be better off from 31 July, following the passing of this bill in Parliament later today. This bill gives effect to the coalition Government's promise to New Zealanders who are suffering with the cost of living crisis. Let me set the record straight: this bill is fully funded so won't add to inflation pressures. This is what a fiscally responsible Government should do and will do. I'm honoured to be the last member to contribute to this bill. So I'm very proud to commend this bill to the House. A party vote was called for on the question, That the Taxation (Budget Measures) Bill be now read a third time. Ayes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Noes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Motion agreed to. Bill read a third time. PUBLIC FINANCE (FINES COLLECTION COSTS—BUDGET MEASURES) AMENDMENT BILL First Reading Hon SIMEON BROWN (Minister of Local Government) on behalf of the Minister of Justice: I present a legislative statement on the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill. SPEAKER: The legislative statement is published under the authority of the House and can be found on Parliament's website. Hon SIMEON BROWN: I move, That the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill be now read a first time. This bill is part of a package of proposals that support the Government's Budget goal to deliver efficient, effective, and fiscally sustainable public services. The package promotes the effective provision of court and tribunal services and will contribute to the target of getting the Government's books back into balance. Furthermore, this bill will increase revenue at a time when we're investing a crucial $2.9 billion into restoring law and order and cleaning up the mess left by the last Government. Our Government is facing up to the reality left behind: New Zealand isn't as safe as it once was. It isn't the New Zealand many of us grew up in. This kind of revenue will allow us to invest in addressing serious youth offending, ensuring there are real consequences for crime, increasing prison capacity, and getting more police officers on the beat. This bill will amend section 73 of the Public Finance Act 1989. I acknowledge the Minister of Finance's agreement to the amendment. The bill will increase the proportion of fines retained by the Crown which are collected in the courts by the Ministry of Justice on behalf of local authorities and other organisations. The percentage of fines collected which will be retained by the Crown will increase from 10 percent to 14 percent and is expected to increase net revenue by $2.697 million across 2024-25 to 2028-29. This does not include fines collected for Government departments or Crown entities but does include council-controlled organisations. Provision of collection enforcement services by the ministry for local authorities and other organisations includes a high volume of fines imposed for infringement offences. Individuals who commit an infringement offence such as illegal parking must pay a fine. If a person fails to pay an infringement fee, local authorities can choose whether to use the collection and enforcement services provided by the courts to collect this fee. When fines are recovered by the Ministry of Justice on behalf— Hon Dr Duncan Webb: It's a parking tax. Hon SIMEON BROWN: —listen—of local authorities and other organisations— Hon Dr Megan Woods: We're listening all right—so's the rest of the country. Hon SIMEON BROWN: Listen up. When fines are recovered by the Ministry of Justice on behalf of local authorities and other organisations, 10 percent is credited to the Crown in accordance with section 73 of the Public Finance Act, and the remainder of the fine is paid by the local authority. The 10 percent deducted from fines is retained by the Crown, rather than the ministry, but reflects a contribution towards the cost of collection and enforcement services. The 10 percent retained by the Crown from fines it recovers was set in 1989 and has not been reviewed or increased in over 30 years. The costs of collection have, of course, increased over that time. Local authorities and other organisations who receive most of the money the court collects for their fines benefit from using the service and should be responsible for a reasonable level of costs for the recovery. The increase in the amount of the fine the Crown retains from 10 percent to 14 percent is comparable to the proportion charged by private debt collectors. The recovery rate will remain competitive whilst still helping to cover the costs of collection. This bill is part of a suite of changes to update fees and costs in courts and tribunals which will increase revenue. These fees and costs will be increased in line with inflation since they were last set, and most come into force on 1 July. There are 26 Orders in Council giving effect to the fee changes. Most of these have not been updated in over 10 years. These collection charges include fees paid to file unpaid infringements for collection and the court costs—these have not been updated since 1998—and the enforcement fee for fines, which was last updated in 2013. It is appropriate that the costs of collecting and enforcing fines are recovered from those who commit the offences and have unpaid fines. The suite of changes, which includes this bill, will encourage recipients to resolve their infringements directly with the issuing authorities, rather than leaving them unpaid. It is important that where the courts' collection services are used, the portion of fines retained by the Crown is also increased through this bill to ensure it reflects increases in collection costs. It is intended that this bill will come into force through the Budget night legislation, and the proposed commencement is 1 July 2024. I commend the bill to the House. ASSISTANT SPEAKER (Teanau Tuiono): The question is that the motion be agreed to. Hon Dr DUNCAN WEBB (Labour—Christchurch Central): No wonder there was kind of a smattering of half-hearted applause from the members on the other side there. That was one of the— James Meager: We're waiting for the rest of the speeches. Hon Dr Megan Woods: That's why you're losing your long weekend. Hon Dr DUNCAN WEBB: We're very happy to be here and to debate the important issues of the day that this Government want to raise under urgency. One of those, my friends, is that we think we should make the local bodies pay a bit more to the Government for parking fines. We've got a parking fine tax. I don't know where that member got his numbers from saying that this was going to raise millions of dollars, because the disclosure statement that I've got off the Table says that this piece of legislation next year will raise $466,000. So here we are debating fiercely a 4 percent increase in—and this is what this Government does: it's so scrambling around to find money for its tax package that it's had to go right to the back of the cupboard and find a 4 percent increase. Of course, the irony is that this is a 10 percent levy on collections that's done through the court system. Of course, you don't need to increase it and adjust it for inflation because it's a proportionate levy. It makes perfect sense. That's the other thing. I mean, David Seymour must be seething because he's got his new Ministry for Regulation thing going on and one of his big bugbears is that levies and charges need to actually relate to the costs. What work has this Government done? None. This is just a grab—this is just a grab—and this utterly cuts across the work that David Seymour wants to do. So this is just a tax—and it's not just local bodies, actually; it's any number of entities, if you read the legislation itself. It's any local authority or other organisation, department, an Office of Parliament, a Crown entity, a Schedule 4 organisation or a Schedule 4A company. Whenever they go to court to collect a fine, then this levy will be applied. So it's just a little money grab, effectively a tax on these other entities. The other thing—if the Minister had done his homework, he'd know—is there's a whole lot of exceptions littered throughout legislation as well. So fines under the Dog Control Act are exempt, for example. The Accident Compensation Corporation is also exempt. Fines under the Resource Management Act are also exempt. So it's a strange little piecemeal thing. But, look, this is the choice they've made; this is how they're going to do it. They've chosen to borrow money to increase debt. They've chosen this trivial tax package which is giving derisory amounts to our lowest-paid workers and they've got to find the money somewhere, so they're going to dip into the back of the cupboard and impose an extra levy on local bodies. Of course, we've got our spokesperson for local government, the Hon Kieran McAnulty, here and I'm sure he may have something to say because this is how they treat local bodies. They don't help them out. In fact, here they are; they've got increasing rates—increasing rates—and what do they do? They just take a bit more money off them. They're hanging out our local bodies to dry. Actually, the funny thing is that if there is any money to be made, it's not by this bit of legislation; it's by the numerous Orders in Council that the Minister alluded to in his speech. Because what they're going to do there is they're going to actually increase significantly the costs that are imposed on people who go to court to argue about their parking fine. And let's just—and this is in the disclosure statement—remember who this will impact most. It will impact our poorest New Zealanders. In fact, the disclosure statement itself says this will likely impact Māori and Pasifika disproportionately as well. So there we go again. Either—[Interruption] It's what it says. You can naysay, but if you've done your homework and done your reading, you can see that that's what it says. At least there is a disclosure statement in this case. This is another ridiculous, trivial bill raising a few hundreds of thousands of dollars, and we're doing it under urgency, utterly, utterly unnecessarily, but you've brought it here. We're going to do our job. We'll have a good look over it, and we've got a lot more to say about it. But so far, from what I can see, a silly little bill that the Minister's brought to the House, RICARDO MENÉNDEZ MARCH (Green): The Government is so desperate to find cuts to fund their tax cuts that ultimately benefit those who already have the means to do well, while throwing breadcrumbs to everyone else. They're basically willing to reduce the amount that local government is able to have when it comes to the collection of fines, which actually, supposedly, are used to deter poor behaviour. But let's make it clear: fines, in the first place, were already a free pass for the wealthy to get away with bad behaviour, because if you're rich, a fine means nothing but a wet bus ticket on the wrist. A fine, if you're on a low income or if you're on the benefit—the same people who benefit the least from the Government tax cuts—could mean the difference between being able to pay your rent. So let's also eliminate where the Government is coming from: relying on punishments that actually, ultimately, only tend to affect the lives of those struggling the most and allow those who have six-figure salaries or more to get away with poor behaviour, and, at the same time, making it harder for local government to have the revenue to do what it needs to do to provide services to our local communities just to pay for those tax cuts. This is an unserious Government—fiscally irresponsible—that will, at any cost, for the optics of having tax cuts, completely undermine our public services, will undermine local government, and will continue with the rhetoric of using fines, which again are punishments for the poor and a free pass for the rich. The Green Party thinks that the answer lies in the devolution and the resourcing of services to local entities. And for a Government that talks about localism, this is a bill that does the exact opposite. It's really interesting just how fiscally illiterate the members on the opposite side are. You know, when Duncan Webb was talking about the amount of revenue that is going to be collected by this bill, the members opposite me said, "Oh, there's a lot of money for a person." No single individual is going to keep that revenue to themselves. That's revenue the Government will be using, so I would encourage the members opposite to me that if they're going to be interjecting, at least they should not be—or, actually, I invite them to demonstrate their interjections how fiscally irresponsible and illiterate they are and how much they're committed to actually punishing those doing it the toughest while at the same time cozying up to the wealthy elite, the property investors, the 70 homes - owning landlords who will then be complaining about a potential capital gains tax from the left. This bill is a nonsense bill. If we want adequate services for our communities—our communities having the right to have good waste disposal services, for example—the answer lies in resourcing our local entities, not depriving them of funds and the Government collecting that to offer these tax cuts. The truth is that this bill comes in the context of the Government making the cost of living more expensive for our communities. This bill is part of a range of interventions that relied on making life more expensive for people. And so the Green Party just simply won't be supporting this bill. This bill also goes against our principles of appropriate decision making, because at no point, have we seen adequate consultation with local government authorities to ensure that this bill is adequately consulted on with those local government authorities who ultimately will be affected. The bill relies, like I said at the beginning of my contribution, on punishments that allow the rich to get away with poor behaviour. If we look at the regulatory impact statement, it's laid bare here that low-income individuals are likely to be disproportionately impacted by increasing costs. And I'll quote: "These individuals are more likely to be unable to pay on time in the first place and may be more likely to default on their fines and have enforcement action taken against them." The fines that we're talking about end up criminalising poor people. For a Government that is so supposedly serious on reducing crime, they're actually relying on means that end up criminalising people in poverty—a completely unserious Government. But I don't even want to appeal to their values as if they care, because they don't care. They don't care about people in poverty, they don't care about disabled people who are doing it the hardest, they don't care about the poor people they're criminalising, and they don't care about their so-called localism they promote, because this bill shows otherwise. It's a completely unserious Government, and the Green Party won't be supporting this bill. CAMERON LUXTON (ACT): Thank you, Mr Speaker. Nobody likes fines—getting them, paying them—but, unfortunately, sometimes this happens. Nobody likes to pay a fee in court, but often people end up there. And when that is done and there is a cost associated with that, it should be paid. Now, for too long, 10 years in some cases, and 20 in the case of court fines, the price has not gone up. This is a very fair increase, and I commend it to the House. TANYA UNKOVICH (NZ First): I rise on behalf of New Zealand First to support the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill. This bill amends the Public Finance Act 1989 to increase, from 10 percent to 14 percent, the percentage the Crown retains from amounts of fines recovered for offences prosecuted by or on behalf of local authorities or other organisations. This will better reflect the cost of the collection and enforcement of court fines and ensure that it remains fiscally sustainable. This seems to be like a very common-sense approach, and since our party is a party of common sense, I commend this to the House. Hon PHIL TWYFORD (Labour—Te Atatū): This rather modest, or some might say pathetic, little bill that's take that's taking up the time of this House, chewing through taxpayers' money—as my colleague Duncan Webb pointed out, is likely to generate $466,000 for the Crown finances in the next financial year. It'll probably cost more money going through this House in urgency than it will generate in the next financial year. It's unnecessary. But I'll say this: this bill actually tells an important part of the story of this Budget. You see, this Government is desperately trying to claw back every little bit of revenue that it can get its hands on to shore up its crumbling finances. This bill increases the percentage of fines retained by the Crown when the courts gather fines on behalf of councils. The important bit of the picture for the public to understand is that this Government handed over $2.9 billion in tax breaks to landlords, part of a package of $14.7 billion that this Budget gives in tax cuts that will disproportionately benefit the well-off. Now, net debt, as a result of this, will rise over the next four years by $68.3 billion to more than $220 billion. That's $12 billion more than the Treasury forecast last December. Now, a member on that side of the House stood up not very long ago and said that the tax cuts are fully funded—the tax cuts are fully funded. Well, the only way you can say that the tax cuts are fully funded is that they are fully funded by borrowing—they are fully funded by borrowing. The Government is giving $14.7 billion in tax cuts; they are borrowing an extra $12 billion. They are fully funded by borrowing—that's what they are. So how is the Government trying to make their dodgy numbers add up? Well, they are shovelling costs onto Kiwis like there is no tomorrow. They're bringing back the $5 prescription medicines fee. They have slashed the public transport subsidies that provided free public transport for our kids and half price for young people. There are extra road-user charges for electric vehicle users, and a 50 percent increase in car rego. They have cancelled First Home Grants. They are scaling back the building of State housing. They have reduced the quality of school lunches, and they have increased tuition fees for students in their first year. And now, there's no depth too low for this Government to stoop than actually spending the valuable time of this House in urgency, clawing back hundreds of thousands of dollars in parking fines. The fact that they didn't campaign on this in the election campaign is misleading. It is dishonest. There was no word of this during the election campaign, but it is part of an organised campaign of clawing back revenue from New Zealanders by imposing a raft of new charges. But there's more. All of these extra costs imposed on Kiwis are having an inflationary effect. According to Reserve Bank data, fees and charges increased; the inflation for the last quarter was 2 percent—it has doubled since the Labour Government was in office. That is, without doubt, contributing to inflationary pressures that will keep interest rates higher than they otherwise would have been. And that, more than anything—more than the raft of extra charges this Government has imposed on New Zealanders—will hurt hard-pressed families by increasing their mortgage servicing fees. This is a Government that is making bad choices, it is breaking promises like there's no tomorrow, and New Zealanders won't forget it. JAMES MEAGER (National—Rangitata): Well, ladies and gentlemen, now we know why the Labour Party thinks that the tax relief offered by the Government is trivial and miserly and not quite enough, because the Labour Party wants to email every hard-working New Zealander and take their tax cut and donate it back to the Labour Party. That's what they want to do. That's what they think is an appropriate use of taxpayer dollars—back to the taxpayer, straight back in Labour Party coffers. Shame on them. This is my first contribution today, which is also 30 May still in Parliament land, and as it is 30 May, I'd like to wish Mike Butterick a very happy birthday for yesterday, for today, for tomorrow, for Monday, for Tuesday—for as long as it takes for this hard-working Government to get through the programme to support the Budget that gives tax relief for hard-working New Zealanders and not the semi-retired Labour Party. This bill—and I'll remind the House—is a very concise, very short, very simple, sharp bill; lots of quick, sharp calls because it does one thing: it creates a small increase to the amount collected by the Crown from local authorities, from 10 percent to 14 percent, for cost recovery, basically driven under the rampant inflation from the previous Government. It does one short, simple thing. It is excellent, it is concise, and I look forward to its passage through the House, swiftly or otherwise. Hon KIERAN McANULTY (Labour): Thank you very much, Mr Speaker. I think that speech there was quite telling. I'm very pleased that James Meager realises that we will still be here on Monday and Tuesday, because they thought that we would give up. They gave up. They were giving 60-second, 90-second speeches, and here we saw another one, but it spoke volumes because he didn't actually speak about this bill; he gave a speech to the previous bill. He had a point to make. He didn't have anything to say about this bill, because this bill is a pointless exercise that will actually contribute to them still being here on Monday. Why on earth are we ramming this through under urgency? This bill is utterly pointless in the context of the Budget and utterly pointless in the context of this urgency, and it actually is a relatively small amount of money in the context of the Budget. It does speak volumes as to why they believe that this bill is so important, because they are so desperate for any form of revenue to try and plug the gap. But the problem is the gap is too big. The gap is so big that they've had to borrow billions in order to fill it. But there's a principle behind this bill that I oppose, and it is, yet again, the National Party kicking local government. Yet again, the National Party thinks local government are so irrelevant that we can actually take some of what they would consider income and revenue and try and plug the gap that they created by their decisions, because, ultimately, it is their decisions, isn't it? They are the ones that are deciding to give $2.9 billion to landlords, they are ones who are deciding to reduce the time of the brightline test—they are the ones that are deciding to do that instead of doing things like funding cancer treatment that they promised. But here's the thing: in the context of this bill and local government, they promised that they would help every council in the country pay for their water. Matt Doocey stood in this House, in that seat right there—I remember it like it was yesterday—and he promised councils that if National were elected, they would help them pay for their water. We knew at the time it wasn't true, because we knew that we were talking about $185 billion. They broke that promise, and you can add it to the list, because there is a long winding list of broken promises that result from the Budget, and that is one of them. Now, after doing that, and after repealing water reform and placing the burden back on councils—and we're about to debate a bill that actually won't help councils one bit, and won't reduce rates bills by any meaningful standard—here they are having another crack at local councils. It's not bad enough that they have to pick a Minister who's totally disinterested in the sector; now they have to put the boot in by saying, "Yep, we'll take $400,000 this year and $500,000 the next year." Oh yeah, OK, it's only 4 percent, but here's some context: Local Government New Zealand came to the Governance and Administration Committee earlier this week, and they talked about the pressure that they are under in terms of the rating system. And I asked them whether the Minister had anything meaningful to discuss with them about assisting them with rates, and they said no. They were excited about the prospect that there might be some shared GST for new builds—well, that's not in the Budget, so there's another thing that they've dangled in front of local government and they've taken away. But what they told us, which is useful in terms of understanding how important this actually is to local government, is they used the example of the MacKenzie District Council, who, because of the increase in tourists that have been visiting their district, have had to fund someone to clean the toilets twice a day as opposed to once a day. Now, that small adjustment equates to a 1 percent increase in rates across the entire district. That's massive. So, yeah, OK, fine, it's only $400,000. But that's actually significant for local government, and it's very significant, proportionally, to small rural councils—the very areas that these people are supposed to represent. Hon Matt Doocey: Cheer up—it's not that bad. Hon KIERAN McANULTY: And all I get is "Cheer up". Hon Matt Doocey: You're negative all the time—"Negative Nancy" over there. Hon KIERAN McANULTY: We're negative, because you guys have stuffed local government. It's easy for Matt Doocey to say, sitting there in Waimakariri, who were the lead opponents to water reform, who have all their pipes paid for by the Government after the earthquake, and then say, "No, we don't need reform." Matt Doocey has let his district down. Matt Doocey has let New Zealand down, and he claps and he laughs and it's a genuine display of— Hon Matt Doocey: Hey, I won my electorate, buddy. How did you go? Hon KIERAN McANULTY: Now he's making fun of people who didn't win their electorates; I'll pass that on to Nicola Willis, shall I? They snap and they respond and they have a crack, because they have no answers. It's typical of this arrogant Government. CAMERON BREWER (National—Upper Harbour): I rise to support this bill, that makes a small amendment to the Public Finance Act, but once again the Opposition are using every call obsessing about tax relief. They're obsessing about tax relief, claiming it's both unpopular and insignificant. Well, three numbers—three numbers: polls show that 75 percent of Kiwis want tax relief, 75 percent; that's the first one. Second number: 83 percent of New Zealanders and 93 percent of households would benefit, according to Treasury, from tax relief. They'll benefit from tax relief on 31 July. This is a suite of packages to make New Zealanders' lives a lot better. They're looking forward to it, they want it, they support it; we support them. I commend the bill. Dr TRACEY McLELLAN (Labour): Thank you, Mr Speaker. Thank you for the opportunity to say a few words on the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill. Saying it took longer than what it actually does. It's a trivial little bill that is a waste of our time. But before I start, may I extend my birthday wishes to Mike Butterick. It's an interesting fact that because we're in urgency, the day doesn't actually end, does it? So some people have birthdays, some people have birth weeks or birth months, but I reckon Mike's birthday is going to take about 5½ days, maybe six, so I think we've got plenty of time—to congratulate him on his birthday best of week. Also, while I'm at it, Mr Brewer—if I was him, I'm not entirely sure I'd be mentioning polls at the moment. I don't think that that's necessarily a good way to make a contribution, but nevertheless, I digress. This bill raises two things for me and only two things. I think, as has been said, it's the second bill up in urgency. It's like a jewel in the crown, isn't it? You know, the No. 2 banner comes up and what have we got? The Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill, which is, essentially, just a parking ticket tax—that is all it is. I mean, we remember, don't we? It's not that long ago that both Nicola Willis and Christopher Luxon were talking a really big talk about what turned out to be a pretty disappointing tax policy. Then they talked up this really big talk, and actually they both staked their jobs on it and their reputations on what turned out to be pretty facile tax cuts. And here we are, the second bill up under urgency—which is going to take many, many days, and it could have been introduced on Monday morning rather than Friday—talking about parking ticket tax. Now, as has been said, this bill was a bit shoddy and it doesn't really have much of a rationale behind it. The cost recovery impact statement (CRIS), as has been pointed out, said that it took into account private sector fees. That's all right—private sector fees. You might look at some sort of comparison of what the private sector's doing, but it's completely irrelevant. This is about cost recovery, and so even the CRIS couldn't quite get to grips with what this bill is about. Then it talked about cost pressures, but it doesn't actually provide any information or any evidence whatsoever that the current 10 percent charge is failing to recover those costs. But the thing that really gets me is that it's really bad regulation. At a time when we've heard huge amounts of hubris, where we've got David Seymour spending up a storm setting up his Ministry for Regulation, his citadel of all things good regulation, we've got this shoddy little bill coming through, which is clearly just bad regulation. As colleagues have previously said, this is all about choices. There was a choice to put this up second on the order. There was a choice to show and use this House's time to do things that actually mattered, just like there was a choice and the ability to not make so many broken promises, as we've heard over the last couple of days. So, in all seriousness, let's just think about that for a minute. For pensioners that are sitting at home thinking to themselves they were going to get some relief, which is such an oxymoron, they're getting $4.50 a week, and that's per couple. Then you've got minimum wage earners who are earning 50c more an hour. These are the choices that were made. This is the bill we're debating instead of things that are more serious. If you want to debate things that are serious, why are we here talking about parking ticket taxes? But the one that really kicks it for me is the fact that patients were led to believe, over a period of time, that 13 new cancer treatments were going to be available to them. These are real people with real lives, with real diseases, with real hopes, who were led to believe that this was going to happen, and yesterday during this Budget process, that was ripped out from underneath them, and that is deplorable. But never mind, here we are again talking about parking ticket taxes, something that is completely irrelevant. It is a waste of our time. We're going to be here for hours looking over something that is the Government's choice, and I think it's a complete waste of time. We do not commend it to the House. I look forward to hearing many, many more contributions from that side of the House about how they can justify not just this but all of their actions over the last couple of days. PAULO GARCIA (National—New Lynn): Mr Speaker, thank you. The Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill increases the retention by the Government by 4 percent. A small amount, the members across say, but every small amount helps the Government coffers that have been left in dire straits and in shambles, and every little bit helps. This bill will not only help get the Government Budget in balance but it will also engender accountability and responsibility for people to pay their infringements and fines and penalties. I commend this ill to the House. A party vote was called for on the question, That the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill be now read a first time. Ayes 68 New Zealand National 49; ACT New Zealand 11; New Zealand First 8. Noes 49 New Zealand Labour 34; Green Party of Aotearoa New Zealand 15. Motion agreed to. Bill read a first time. ASSISTANT SPEAKER (Teanau Tuiono): This bill is set down for second reading immediately. Second Reading Hon SIMEON BROWN (Minister of Local Government): I move, That the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill be now read a second time. I would like to thank members for their contributions on this bill in the first reading debate. To recap my earlier speech, the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill makes a minor amendment to the Public Finance Act 1989. This will increase the percentage of local authority and other organisation fines collected by the Ministry of Justice that can be retained by the Crown from 10 percent to 14 percent, with effect from 1 July 2024. This bill is an addition to a suite of Orders in Council that will adjust fees in courts and tribunals and fees and costs for collection services to account for inflation since fees were last updated. The increase in the amount retained by the Crown from fines recovered for local authorities and other organisations is comparable to the rates for private debt collection but remains competitive. It is important that local authorities, who receive most of the money collected, should pay a reasonable amount towards the cost of the recovery of these fines. The change from 10 percent to 14 percent will come into force on 1 July 2024, which will realise revenue immediately and contribute to the Government's Budget goal of delivering a more efficient, effective, and responsive public service. I note members on the other side of the House have been spending their entire debate trying to drag out speeches on a bill which makes a minor but important change to ensure that the functioning of Government can actually be delivered efficiently and that the costs are appropriately recovered—principles of good Government which were ignored for the last six years. I commend the bill to the House. ASSISTANT SPEAKER (Teanau Tuiono): The question is that the motion be agreed to. Hon Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Mr Speaker. Well, such passion over parking fines; it's so good to see. Look, the fact of the matter is, the irony of this is, that the premise that the Minister of Local Government brings this to the House with, that there's been cost inflation in collection, makes no sense on a number of grounds. The most obvious one is that if you're charging a percentage of something, then there is no cost inflation. As the fines go up, the amounts recovered go up. The documents make it absolutely clear that there's no research been done on this. The Government doesn't even know how much it costs to collect these fines. The documents are there on the Table in the cost recovery impact statement. So, yeah, the bill adds another 4 percent levy, so 14 percent, when a local body goes to court to get a parking fine or a noise breach fine or something like that. They're now going to not get all of the money. They were previously getting 90; they're now going to get 86. It's interesting that the Government's now competing with debt collectors, because in the documentation, they say this is comparable with what a debt collector would charge if they were to collect this debt, as if they're in the market for debt collection services, which is a very strange way to approach what size you impose on some charge or levy. In fact, it's not just strange; it's outright wrong. The idea that there's a market for it and therefore you should pitch it at that market when you're the Government just makes no sense. Now, when the Government delivers a service, the Legislation Design and Advisory Committee principles, which are really quite useful, are very clear on this matter. The task of the Government when imposing costs of this nature is to determine what the cost delivery is. Now, there's latitude for when there's overs and unders in multi-year ebbs and flows, but at the end of the day you should never be charging someone an amount which has an extra bit of added fat. But that's exactly what we've heard from Simeon Brown. This is all part of, you know, running a not-too-massive deficit, right? He's going to impose this extra 4 percent and he's going to reduce his Government's deficit by around $200,000. Now, when we get to the committee—of course, we could've had a much closer look at this if we'd gone to a select committee, but the time for that kind of examination will come next, and I'm actually going to be asking him some questions, so he might want to get the work done in advance about how he thinks he is going to make this money, because I frankly can't see it. But at the end of the day, this is just hurting ordinary New Zealanders. The devil, of course, is actually in the regulations which are paired with this piece of legislation where, you know, it talks about increasing the court cost and filing fee from $30 to $55. Now, that's actually going to raise more money than the levy itself. Also adding to, essentially, the enforcement fee—currently $102; going to $133. Now, as is common with this Government, all of the documentation says, "We haven't actually had enough time to work out where the money's coming from or exactly how much it will bring in, but this is our best guess." It's really just not good enough. It's essentially another little tax, because if it's not shown to be cost recovery, it's a tax. So here we go, a nice little tax snuck in through urgency. Well, you know, local bodies aren't going to love you for this. Ultimately, particularly around those court costs, people are going to go and say, "You know, I didn't park there. It wasn't a double yellow line." They've got their right to go to court and have their say, and now when they lose, they're going to be paying more for their right to go to court and ask the question. So that's actually an access to justice question. What we're doing is we're saying, you know, "If you want to have an argument about whether or not you should pay this $60 fine or this $40 fine, then if you lose, it's going to cost you a hell of a lot more." The actual likelihood of people asking the question—legitimate questions—is going to fall, and so that's really, really unfortunate. So the cost recovery impact statement is on the Table, and I would implore members to read it, because it's actually a useful document, and I actually do commend the Government for making sure it was generated before they came to the House, but what is abundantly clear is it's littered with references to the fact that they haven't had the time to actually work through whether this is appropriate, whether it is actually cost recovery or— Arena Williams: Hot reckons. Hon Dr DUNCAN WEBB: —a hot reckon; thank you, Arena Williams. I believe it is a hot reckon. Actually, it's just a guess. It's just a finger in the air, or it's more of a "What do you reckon we could get away with?" That's really what it is. It's rushed, and the other thing is, look, it's absolutely unnecessary for it to be here today. The lion's share of the increases in revenue are actually outside of the control of Parliament, other than the Regulations Review Committee, because the biggest gains are being made by the increases in the court costs and so on, which is done by Order in Council. But no, for some reason, and I am perplexed—and I will ask the Minister when he is obliged to answer, or sort of obliged, why he's come here when he really didn't need to. It's the most trivial of all of the things he could've done. So it's nickel-and-dime stuff, and there's not really been the work done. In fact, I'll quote from the information statement, which says there's limited financial information which provides a reasonable basis for decision making. So it's just classic bad regulatory practice. It's making law in the dark and it's unnecessary and it's rushed, and, not only that but it's such a small matter that it would've been no problem at all to have it done on another occasion in the normal way. So why it's been crammed into this urgency, I really don't know. Of course, the fact of the matter is, even at the 10 percent levy, we already have, as the impact statement says, some councils choosing to use debt collectors because it's more effective. So the irony is that by increasing this amount, there's a—well, the economists amongst us would say, as night follows day, more councils will use debt collectors because the Crown has become less competitive. That's actually not a good thing. I'm not sure we want to be creating an industry of debt collectors who are making money off collecting money for local bodies. You know, I think we should really avoid that. Maybe that's what this Government wants. Maybe they, you know, want to privatise parking fine recovery. That's the kind of Government we've got. Basically, this is an unfair levy. It doesn't bear a relationship to the actual costs; it can't be shown, and that's something that a Government which has come in with a hiss and a roar, saying, "We're going to examine regulation. We're going to make sure we do things by the book. We're not going to run fast and loose. We're not going to"—and, of course, this is exactly, right down the middle, what they rail against: random taxes which aren't thought through. Here we have it: it's not shown to be justifiable, it's not shown to be cost recovery, it hasn't gone through a good process, and yet, boom, there we have it—in urgency, rammed through. Of course, the percentage amount—you know, the Public Finance Act has been there for a while, and it imposed this 10 percent amount on the basis that across all of the fines, it was roughly enough. Of course, as fines have gone up, so has the amount recovered. I am curious—and the Minister will no doubt ask—why he thinks that this will get $400,000-odd in 2025-26 but go to $600,000 in 2028-29. Unless he's going to get the councils to issue more parking tickets, I just can't see what his basis is—unless, of course, he's intending to further increase that percentage amount. Of course, the comparison with private sector fees is entirely inappropriate. The idea that what the Government should charge for a levy is based on what the competition does in the private sector actually cuts fundamentally across what imposing a levy is. Imagine if that's how Zespri levy, or some other thing. It would— Ingrid Leary: Judicial review—judicial review it. Hon Dr DUNCAN WEBB: Unfortunately, Parliament isn't subject to judicial review, but maybe it should be. That's a whole 'nother constitutional conversation. But, silly little bill, poorly proofed, and I cannot commend it to the House. CELIA WADE-BROWN (Green): I rise to speak against the Public Finance (Fines Collection Costs—Budget Measures) Amendment Bill. This is almost the only mention of local government in the whole Budget. Minister Brown has talked up a big storm about working with councils, devolving decisions, letting local communities have their say, but what do we have here? We have an ambush, not a partnership between central and local government. The Ministry of Justice says: "Finally, the paper does not meet the consultation requirements because the proposals in the paper have not been the subject of any substantial consultation with relevant stakeholders." There's the "consultation" word again. The Local Government New Zealand chief executive tells me they were only made aware of this, this morning. Hon Simeon Brown: It's called Budget urgency. CELIA WADE-BROWN: Is it? Or is it a trivial little ambush—an arrogant ambush for a relatively trivial amount of money? There's no budget for city or regional deals. There's no budget for GST back on rates for existing or new properties. There's no allowance—zero allowance—for paying rates on Government buildings. Hon Member: Talk about the bill, for goodness' sake. CELIA WADE-BROWN: We are in a discussion about urgency during the Budget. Hon Member: No, no. We've had the urgency debate already. We're talking about the specific bill. ASSISTANT SPEAKER (Teanau Tuiono): Order! Order! I don't want a commentary. Continue. CELIA WADE-BROWN: There is a context in which this bill has been proposed and it is not an attractive one. Some people have trivialised the issues of where we have fines and enforcement, but let me give you some examples. Nobody likes paying fines, but they're avoidable. If we can't shift cars that are parked on the footpath, that's an issue for anyone with a pram or a wheelchair. If we can't shift cars out of bus lanes, that's an issue of congestion, which I would have thought the Minister in his other hat might have been interested in. Hon Member: How are those cycle lanes helping? CELIA WADE-BROWN: And, yes, it would be a good idea to move the cars out of the cycle lanes—good thinking over there. I think this is cynical and unfair because we are recovering a trivial amount of money for central government, but you are not helping local government recover any of its costs. There's been a recent article—I don't always agree with the third Brown that we're talking about here. We have Minister Brown, we have MP Wade-Brown, and we also have Mayor Brown, so it can get confusing for people. So you might need to be pay attention as to which Brown we're talking about. Hon Matt Doocey: Who's your favourite Brown? CELIA WADE-BROWN: OK, we could have a little poll, but at the moment—and this is something that could have been changed. You could have changed this. Auckland Transport can only charge $53.60 for towing, towing off the footpath, towing out of the cycle lane, towing out of the bus lane, towing off the dangerous corner, and the average tow cost is $99.00. You are really not helping local government. You're getting your measly little extra 4 percent, but you're not helping local government. There are many other— Hon Member: Who's next on the list? CELIA WADE-BROWN: —you can call me "Your Worship", I don't mind. I'm sure Mr Foster won't mind either. Hon Member: Where is he? Hon Simeon Brown: He's a better "Your Worship". CELIA WADE-BROWN: So you want to recover all of the central government costs— ASSISTANT SPEAKER (Teanau Tuiono): Please don't refer to the absence of members in the House—and continue to have a conversation with the Speaker. CELIA WADE-BROWN: Through the Speaker— ASSISTANT SPEAKER (Teanau Tuiono): Yes. CELIA WADE-BROWN: —this Government wishes to recover its pathetic little recovery costs, but there's no partnership. In fact, there's— Hon Member: It's an ambush! CELIA WADE-BROWN: It's lovely to have the help from the Opposition or even the Government. Arena Williams: They're just being horrible. Keep going Celia—keep going. CELIA WADE-BROWN: I shall, I shall. What are fines for? What are the courts for? They are when people want to go and argue the case—and we do need to recover the costs. There's no disagreement about that. But why recover central government costs? Why focus on that? Why not support the councils? Whether they're unitary, whether they're regional, whether they're city, whether they're district, they all have issues that need enforcement. It might be dumping—it might be dumping rubbish into reserves. Oh, we don't want to condone that. But where are you helping local government to recover all of its costs? So we have councils, 76 of them, who already don't quite agree with some of the things that this Government's promoting. Why not form a bit of a partnership? Why not at least talk to them about how we can work together to bring the enforcement into a more even and effective system? It's cynical, unfair, and I think it shows perhaps a lack of understanding of the needs of local government. Thank you. ASSISTANT SPEAKER (Teanau Tuiono): Members, the time has come for me to leave the Chair and go for a kai. The House will resume at 7 p.m. Sitting suspended from 6 p.m. to 7 p.m. …