Hansard and Journals
Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill — Second Reading
Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill
Hon Dr MICHAEL CULLEN (Minister of Revenue) : I move, That the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill be now read a second time. The Finance and Expenditure Committee has carefully considered the bill, and reported it back in December.
The single most important feature of the bill is the introduction of legislation that modernises the taxation of organisations that manage Māori assets held in communal ownership. These organisations, which are known in tax law as Māori authorities, range in size and functions. They may be trusts that manage a single asset, such as a small block of land that involves only a few owners. At the other end of the spectrum they may be large organisations with diversified holdings that involve hundreds, or even thousands, of individual owners, or they may be organisations that receive treaty settlements assets.
Organisations that manage communally owned assets face problems not encountered by ordinary companies and trusts. Communally owned assets cannot be easily sold, and severe restrictions are often placed on their use by specific legislation or Government process. We have always had specific tax rules designed to deal with the administration of Māori freehold land and other tribal assets, and they will continue to be necessary, just as specific rules for other groups of taxpayers are necessary.
The present rules governing Māori authorities were last revised in the 1950s and are now badly out of date. They have become unwieldy, do not mesh well with other tax laws, such as dividend imputation, and now must apply to a much wider range of activities than envisaged half a century ago. They impose unnecessary complexity on contemporary Māori authorities, create high compliance costs, and in some cases double tax income. The new rules introduced in this bill provide greater flexibility and choice for Māori authorities. If they wish to do so, they will be able to apply the general tax rules instead, which may be more efficient for some of them. The proposed changes will enable them to structure their affairs more efficiently, whichever tax laws they use.
The bill tightens the definition of Māori authorities for tax purposes. They will include only those organisations that manage communally owned assets, and whose ownership and administration are subject to certain statutory restrictions or Government processes. Not all organisations that qualify as Māori authorities under the present definition will do so under the new definition. The committee has recommended clarifying that the definition includes entities that are subject to the legislative restrictions of the Maori Land Act, and bodies that receive and manage Treaty of Waitangi settlement assets, including fisheries assets. The Government agrees with these changes.
The measure that has generated most heat in some quarters is the proposal to introduce a tax rate of 19.5 percent on the income of Māori authorities. Some have claimed that this would introduce favourable tax treatment based on race. This is simply untrue. This measure does not apply to Māori as a group, it does not apply to all businesses run by Māori, and it does not apply to all organisations that manage communally owned Māori assets. To reiterate a point of fundamental importance, the 19.5 percent rate will apply only to organisations that manage communally owned Māori assets that have heavy restrictions on their use and management imposed upon them by legislation or Government process. There is a simple rationale for that rate. It is the rate at which all New Zealanders pay tax on the first $38,000 of their income. Since 90 percent of the owners of tribally owned assets are estimated to earn less than $38,000 a year, 19.5 percent is the statutory rate for that vast majority. Tax from Māori authority income will be paid at the authority level, at the rate that is most sensible for the vast majority of members.
From an administration perspective—which costs taxpayers money—it is much simpler to withhold tax at the statutory rate for most members than to withhold it at a higher rate and require most members to seek tax refunds at the end of the year, particularly because, in this case, many of the individual owners have very small amounts of assets involved, so the level of tax rebate involved in many, many cases will be very small. We are talking in terms of a figure of between 19.5c and 33c of a rebate of $10, $20, $30, or $40, in many cases. It is administrative nonsense to impose that kind of burden, not on the Māori authorities, but on the Inland Revenue Department and the taxpayers who fund the Inland Revenue Department. To accuse that of being racism is simply to get one’s hat on completely upside down and wonder why it is getting full of water.
Let me cite an example of the difficulties a higher tax rate creates in this case. The Māori Trustee, which administers over 2,000 properties, makes distributions to over 50,000 individuals a year. The average size of these distributions is estimated to be about $135; if it were taxed at 33c, the average refund due would be less than $20 for those 50,000 people. That does create real compliance costs.
The estimated 10 percent of owners who are on a higher statutory tax rate will pay the remaining tax on the income at that rate, when the income is distributed by the Māori authority. Individual Māori will not benefit from the 19.5 percent rate if they are higher-income earners, because they will still have to pay tax at 33 or 39 percent when the income is distributed and they put in their annual tax return.
The committee considered the many viewpoints expressed in submissions on the bill. The main change is to remove wholly owned companies from the 19.5 percent rate, because it can be argued that that would give them a competitive advantage against similar companies operating in similar areas of activity. But let me say that is a fine judgment, and there is still a theoretical argument in favour of imposing a 19.5 percent rate. It is a compromise, but a fair compromise.
There are many other important changes in this bill, and, particularly, very many taxpayer-beneficial changes—for example, taking into account taxpayers’ good behaviour when imposing two of the five categories of tax shortfall penalties. The committee also recommended amendments that recognise that taxes paid more frequently, such as GST, offer more room for taxpayer error, so need a more concessionary approach. The Government agrees with those recommended changes. The bill also, of course, provides for the annual approval of the statutory rates of income tax.
An amendment added to the bill after its introduction exempts people visiting New Zealand as crew members of superyachts from paying income tax in New Zealand. It is clear that the present law, if enforced, would simply lead to those people exiting every 6 months to go somewhere else, and we would probably lose some of the maintenance work that we do on those superyachts within New Zealand.
So this is a very important bill. It incorporates an important change. We will hear much huffing and puffing about so-called race-based taxation. It is totally meaningless for that to be said, but that will not stop a number of gums beating together at great length over the coming period of time.
Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) : This bill obviously contains several elements. I agree with the Minister of Revenue that those relating to compliance costs are positive for taxpayers. The issues relating to penalties being more appropriately adjusted to the crime being committed by a taxpayer, and the effort to improve use-of-money interest arrangements to allow tax pooling, are positive measures. But the bill contains two sets of measures that the National Opposition cannot accept.
The first is that this bill confirms current tax rates and the current tax brackets. I wish Dr Cullen was able to hear this point. The recent OECD analysis showing that New Zealand has the second-highest increase in income tax of any country in the OECD other than the Czech Republic, for an average wage-worker—or production worker as the OECD calls it—relates partly to our tax rate system and the tax bracket system. Over the years in which the OECD has done this analysis, the average wage of a production worker in New Zealand has been right at the cusp of the 19.5c-33c change. If we look at the data that the OECD has been working on, we see that the actual New Zealand dollar average wage of that production worker, which it is all based on, is exactly $38,000 or $39,000. So we have a whole shift in the number of people starting to pay 33c in the dollar instead of 19.5c in the dollar. The Government is collecting far more income tax as a consequence. The OECD has pointed out that this Government is taking more income tax off ordinary, working New Zealanders. The increase is bigger than for any other country in the OECD, other than the Czech Republic—bigger by far than for any other country in the developed world, other than the Czech Republic.
Here, with this bill, we confirm the existing rates and existing tax brackets that are doing that to ordinary, working people in New Zealand—and National opposes that. The Government should not be doing that; it should be thinking about what its tax policy is doing to ordinary, wage-earning people, but, clearly, it just does not care. We hear the rhetoric about this Government caring about ordinary, working families but, clearly, with this bill it does not care a jot. The fact that it is clawing a bigger increase in the income tax take off the ordinary, working family in New Zealand than in any other country in the developed world does not seem to worry it. With this legislation the Government confirms the very rates and the very tax brackets that are doing that to our average family in New Zealand. If it cares to look at the OECD analysis, it will see that our average worker in New Zealand is sitting right on the cusp of the shift from 19.5c to 33c—just over that cusp—and that is one of the reasons this Government is clawing so much more tax off the average worker in New Zealand.
That is the first thing National objects to, and one of the reasons that we oppose this bill—despite the useful compliance measures in it. But the second problem with this bill is one that worries us even more. Dr Cullen tried to write it off as if it were not serious and significant, but it is serious and it is significant. For the first time that I am aware of in this country’s history, a favourable tax rate is being applied on the basis of race. Whatever way one looks at this bill, one cannot reach any other conclusion.
Clayton Cosgrove: Rubbish!
Dr the Hon LOCKWOOD SMITH: Clayton Cosgrove sits over there and says “Rubbish!”. I want him to identify one other racial group in New Zealand—just one, other than Māori—whose businesses will receive this favourable tax rate of 19.5 percent. Is there a Pacific Island business that will receive this favourable 19.5 percent tax rate? Is there one low-income group of European descent that will receive this 19.5 percent tax rate for its business? There is not one. The only businesses in New Zealand that will receive this favourable 19.5 percent tax rate are Māori businesses. It is not good for the future of this country to make our tax law on the basis of race. That is wrong, whatever way one looks at it.
Having said that, I acknowledge there is a problem with the taxation of Māori authorities. I am not being blind to the problem, which a lot of people will not understand, so let me explain it very clearly. At present, if a Māori authority distributes its profits, it is treated like any other business. It pays 33c in the dollar tax, which is imputed so that any persons receiving a share of those profits do not need to pay any more tax than their normal statutory rate. There is a problem, though. A Māori authority that does not distribute its profits is taxed 25c in the dollar—25 percent. If it does not distribute that profit within 4 years, but does distribute it thereafter, that 25 percent tax is not refundable. If the profit is not distributed within 4 years, that 25 percent tax is not refundable. Therefore, if it distributes after 4 years, there is an issue of double taxation. I accept that. Although I say, and although National says, that it is wrong to give special taxation treatment on the basis of race, it is also wrong to have double taxation of some people in this country, and doubly wrong should that double taxation apply only to Māori organisations. So I accept that there is a need to remedy that flaw in our tax law. That is absolutely accepted.
But we do not fix up one inadequate piece of law by replacing it with legislation based purely on race that confers a tax advantage on a race. For Dr Cullen to say that it does not confer advantage is not consistent with what the Finance and Expenditure Committee found. The select committee recommended that wholly owned subsidiaries should not be included. The reason the select committee suggested that—and Clayton Cosgrove was the chair of the committee—was that it could see that if a business was being taxed at a lower rate on profits that it had retained, it had a competitive advantage in being able to invest more money in the future. It paid a lower tax on profits, had more money to invest, and therefore was at a competitive advantage. David Parker, a new Labour member—he is an accountant—accepted very clearly the reality of that competitive advantage. The Government members of the select committee accepted that wholly owned subsidiaries should be excluded from this favourable tax rate.
This is the sharp point. There are among Māori organisations businesses that are not wholly owned subsidiaries but come within the definition of Māori organisations in this bill. Major farming businesses, some of the biggest farming businesses in our country, will be able to compete ahead of other farming businesses, to reinvest more in their business, because they will be taxed at a lower rate. That is wrong. We do not fix up one problem by implementing an even greater wrong. Conferring greater benefit on the basis of race is not right for this country.
I urge Labour to rethink what it is doing here. This will be very divisive. It is not good for New Zealand’s future. It will result in disharmony. It does confirm privilege under our tax laws, purely on the basis of race. We reject that, and I think most sensible, right-thinking New Zealanders will reject that. The Government should go back to the drawing board and remedy the problem around the taxation of Māori authorities with new legislation that does not confer privilege on the basis of race. It is morally wrong to do that.
GORDON COPELAND (United Future) : I rise in support of the second reading of this important bill. Many of the bill’s provisions are non-controversial and are aimed at both reducing compliance costs for taxpayers, particularly businesses, and clarifying areas of uncertainty with regard to the present law. These provisions will be welcomed by all taxpayers.
For example, the provisions relating to charities will, I believe, be welcomed by that important sector. The change made is relatively minor, but it is a precursor to the Government’s announced intention to establish a charities commission that will register and monitor the activity of that sometimes under-appreciated sector of New Zealand society. It is a sector that United Future wants to see strengthened in every way possible, because it is so fundamentally important to the functioning of a robust civil society. For example, research estimates that a dollar of social benefit delivered to families and individuals through charities would cost the taxpayer $2, were it to be delivered through the Government bureaucracy. Peter Drucker, the guru of modern management and organisational excellence, has concluded that charities are the most efficient organisations ever devised.
There is one aspect of this bill, however, that has proved to be controversial, and it relates to the new Māori authority tax regime. That has been signalled already by Dr Cullen, and was well exemplified by the speech we have just heard from the Hon Lockwood Smith. It is a pity that this has become controversial because, from a tax policy point of view, the matter is clear and straightforward. The new rules simply align the rate of tax paid by a Māori authority with the marginal tax of its beneficiaries. In this particular instance, a 19.5c in the dollar rate has been struck, because that is the rate that will be paid by 90 percent of those beneficiaries. This, in my view, is exactly right in principle, just as it would be right for a rate of 39c in the dollar to be struck if 90 percent of the beneficiaries of Māori authorities were in that tax bracket. Business New Zealand and other submitters to the Finance and Expenditure Committee expressed their wholehearted support for the new Māori authority regime and specifically asked the Government to extend its principles into other areas, such as superannuation and life insurance funds, so that there, too, the tax rate paid will coincide with the marginal tax rate of the members of those funds. Dr Cullen has indicated that, at least in principle, he agrees with those submissions.
However, the point I want to emphasise is that Māori authorities, as defined in the bill, are a reality and have their origins in the culture and customary practices of Māori prior to the arrival of other races in Aotearoa New Zealand.
If our history had been different, and the authorities involved were Vietnamese, Chinese, English, or Scottish, then that would not alter one iota the principles involved, and any pretence to the contrary simply does not stand up to the analysis of common sense. In my judgement it is mischievous and shallow to attempt to classify the situation as an example of race-based laws. In that connection, I add that it is also the conclusion of well-known tax commentator by the name of John Shewan of PricewaterhouseCoopers, who has also come out publicly and said that this is not an example of a race-based law.
However, the other discussion on this issue centred on competition—the point dealt with by Dr Lockwood Smith. The argument was that the 19.5 percent rate for Māori authorities would give them a competitive advantage over other types of businesses that may be paying tax at, say, 33c or 39c in the dollar. I felt that argument was put to bed very clearly by Robin Oliver, the general manager of tax policy for the Inland Revenue Department. He pointed out—in my view, entirely correctly—that so long as we have a progressive tax system in New Zealand, determined by income bands, then similar organisations with relatively higher or lower tax would end up paying tax at different rates.
Let us take an example. Let us suppose that there are two sole-trader panel-beating shops operating alongside each other. One shop is not faring too well, and its owners are paying tax at 19.5c in the dollar. For the benefit of Dr Lockwood Smith, I would like to point out that it does not matter whether that panel-beating shop is owned by a Chinese, a Vietnamese, a Scotsman, or an Irishman—it has nothing to do with race. The other shop is a roaring success, and its owners are paying tax at 39c in the dollar. [Interruption] I am responding to the member’s challenge to Clayton Cosgrove to name any business owned by other than Māori that would be paying tax at 19.5c in the dollar. I am saying to him that any sole-trading panel beater of whatever race who is in that income bracket will pay tax at 19.5c in the dollar. In those circumstances, how can we claim that the business paying the higher tax rate is at a competitive disadvantage? In fact it is obvious that it is exactly the other way around, and that the poorer business—the guy who is making less money—is struggling. That exactly parallels the situation here.
Whilst it may be true that profits retained by the Māori authority, at least from a timing point of view, attract tax at a lower rate than income retained by businesses paying, say, 33c in the dollar, that is only one side of the coin. The other side, alluded to in my example of the panel beaters, has to do with the overall wealth of the organisation and, in particular, its access to new capital funding. When it comes to new capital, Māori authorities are in reality at a competitive disadvantage for two reasons. Firstly, as mentioned above, 90 percent of their shareholders or beneficiaries are in the lowest income tax bracket—hardly a fruitful source for new equity. Secondly, lending institutions are sometimes more reluctant to lend, or lend at higher interest rates, because of the communal land ownership structures that are a feature of these organisations. Personally, I am entirely satisfied that when we look at the bigger picture the competitive argument can safely be dismissed.
Perhaps I could conclude by emphasising how important it is for Māori business in New Zealand to flourish. As a nation we have growth aspirations, and that will not happen unless Māori business also lifts its game and becomes more profitable. For that reason I would be very satisfied indeed if I should live to see the day when 90 percent of the beneficiaries of Māori authorities were paying tax at the top end of the bracket rather than at the bottom. United Future will support the second reading of this bill.
Hon DAVID CARTER (NZ National) : I was intrigued by that contribution from the United Future man Mr Gordon Copeland, in which he attempted to argue to justify the special tax rate that has been apportioned to Māori authorities. It seemed to me that his basic tenet for his argument was that Māori were in this country first.
Clayton Cosgrove: You were the finance spokesperson?
Hon DAVID CARTER: I will add to that. I was also the chair of the Finance and Expenditure Committee that the member now chairs. I tell that member that if I had been there chairing the committee on this bill, I would have done a far better job of this legislation than has been done with it.
Clayton Cosgrove: Why did Bill English sack you as finance spokesperson?
Hon DAVID CARTER: I do not know. The member will have to ask him. I tell him though, that I have far more confidence in the man who is now our spokesperson on finance than I have in the person who is the Labour Party spokesperson on finance. I am absolutely sure of that.
I want to speak about the special rate that has been created for Māori organisations. It does mean that there is a competitive advantage. People in business will now have the ability, if they are a Māori authority, to pay tax at a lower rate than a business operating right next door that is carrying out exactly the same business activity.
Hon Tariana Turia: Be a Māori and try to get a loan from a bank.
Hon DAVID CARTER: This legislation has nothing to do with getting a loan. This legislation sets the tax rates, and the tax rates are paid only when that business is operating at a profit. I tell the member that this legislation has nothing to do with getting loans. One of the most successful corporations in the South Island is Ngāi Tahu Holdings Corporation. It has done a superb job, but it will now have a tax advantage. I sat on the Finance and Expenditure Committee briefly when Ngāi Tahu appeared before it arguing in support of this legislation. I asked Ngāi Tahu whether it was in a takeover for Shotover Jets, a business that at that stage was, and I think still is, listed on the Stock Exchange, and it said it was. I said to Ngāi Tahu: “Having then successfully taken over that company, you’re going to argue to the select committee that it should pay a tax rate of 19.5c in the dollar, whereas Kawerau Jets, which operates in opposition to it, would then have to pay tax of 33 cents?”. To be fair to the select committee, as I was on it only for that day, I understand that it has picked up—[Interruption] Mr Chairperson, could I have a little bit of silence to outlay this argument.
The CHAIRPERSON (H V Ross Robertson): I remind members that running commentaries are out of order. If they would like to check that, they can look at Speaker’s ruling 51/5(3).
Hon DAVID CARTER: I pointed that out to the select committee, and, to its credit, it now says that if a business such as Shotover Jets is a wholly owned subsidiary, then it should not be entitled to the special concessionary tax rate. That goes some way to strengthening my argument that it is a concessionary tax rate. Let me tell members that any sharp accountant now has the opportunity to minimise the tax that companies will pay on a successful, wholly owned subsidiary and end up making sure that the tax they have to pay is within the Māori organisation. They will therefore be paying it at 19.5c. If companies cannot employ accountants who can engineer that, then they have a problem with their accountancy company. So they will have a competitive advantage.
Let me take another industry in which Māori are very significantly involved and in which they do a very good job—agriculture. Many of their farms are owned collectively and are Māori organisations. They might exist right next door to a farm that is run, or owned, by Polynesians, Chinese, or Pākehā New Zealanders.
Hon Tariana Turia: Individual choice.
Hon DAVID CARTER: Yes, individuals. Now, under this legislation, they pay substantially different tax rates. I say that is unfair.
Hon Tariana Turia: Most of them are beneficiaries.
Hon DAVID CARTER: Tariana Turia just keeps on interrupting. Because of the state of this economy, most New Zealanders are not paying the top tax rate. Most New Zealanders, who may own a few shares in a company like Air New Zealand, do not pay 33c in the dollar. But do we create a special exemption for them? No, we do not. So members should not come into this House and suggest that this legislation is not racially based, because it is. This legislation is racially based, because it gives one tax rate to people who are Māori, and that tax rate is not available to anybody else.
David Benson-Pope: What’s that member’s solution?
Hon DAVID CARTER: Mr Benson-Pope now wants me to do the tax rate for the Labour Party. I will do it, instantly.
Jill Pettis: How?
Hon DAVID CARTER: By bringing down everybody’s tax rate to 19.5c. That is the answer. It took as long as that to think of the answer. That is the solution. If everybody’s tax rates were brought down, there would not be this problem.
Darren Hughes: Why not 19 percent, like yours?
Hon DAVID CARTER: Mr Hughes does not know my tax rate—he does not know whether I am on 19 percent—and I am not about to tell him what it is.
The other point I want to comment on is that this legislation also cements in the annual tax rates. I do not want to let an opportunity go by without saying that the tax rates in this country are now constraining growth. Helen Clark comes into the House in question time, and time and time again she says there is no relationship between tax rates and growth, and she would be the only informed economist in the world who would argue that. Even Dr Cullen cringes when Helen Clark makes those sorts of stupid remarks.
Darren Hughes: Lindsay Tisch believes that.
Hon DAVID CARTER: Lindsay Tisch can speak for himself, and very shortly he will. He will make a very good speech. Two things are wrong with the current tax rates, and there was an opportunity to do something about them. We had the stupid legislation that increased the envy tax—the 39c in the dollar tax rate—in the year 2000. In fact, as a result of the surpluses, it has been proved that the Government never needed to do that. It created all that inconsistency in tax law and resulted in people having to rush off to their accountant and say: “Corporatise me, because I don’t want to pay 39c.” Thousands of people have done that. Sure, they have complicated their own tax affairs, but they are not paying 39c. It is relatively easy to set oneself up. But the sad thing is that the Government never needed to do it. It gained the Government around $400 million, and that has not been necessary—
David Cunliffe: Robin Hood in reverse.
Hon DAVID CARTER: Robin Hood in reverse? No, no. I come from a different philosophy from David Cunliffe’s. I do not think that because people are successful they should be penalised with more taxes. That is a nonsense point of view, but I acknowledge that some people in the Labour Party feel that people should not be allowed to be successful, and that if they are successful, we should drag them down by putting up tax rates.
My final point is one that Dr Lockwood Smith also made. It is about the recent OECD report that pointed out that it is actually ordinary New Zealanders who, because of the cusp they are finding themselves on—they are moving into the next tax bracket, about $38,000—are paying far more tax now than they were. Lockwood Smith gave some very credible figures from that OECD report—
Hon John Tamihere: Oh, yes! Very credible.
Hon DAVID CARTER: —that is, if members accept the OECD reports. Mr Tamihere might have a “BS” description or a “blankety-blank” description of it, but I do not.
Clayton Cosgrove: I could use one about this member’s speech.
Hon DAVID CARTER: I guarantee that Clayton Cosgrove has not even read the report, which clearly states that people are paying more tax than they need to.
CLAYTON COSGROVE (NZ Labour—Waimakariri) : That was an amazing speech, for a number of reasons. First, for the first time in history David Carter admitted that Bill English did sack him as the Opposition spokesperson on finance—and after that contribution, is it any wonder? The other startling thing in this debate is that the Minister of Finance got up—it is his bill—and spoke, but there was no call from Don Brash, the Opposition spokesperson on finance, the one who blew David Carter away, the one Bill English put in ahead of David Carter. I invite Don Brash, the Opposition spokesperson on finance, to get up and take a call.
We heard some contributions from Dr Lockwood Smith and David Carter that basically dealt with two concepts. The first was the issue of high tax. They rabbited on about how, allegedly, New Zealanders are overtaxed. Dr Lockwood Smith said—I think this was the phrase he used—that these taxes impact on working-class New Zealanders. But he never acknowledged that a significant, positive impact on working people and people down on their luck is what Governments do with their tax revenue. Governments can provide, for example, State housing—which that mob sold off—decent health-care, and social services. That also has, on the revenue side, a positive impact on working people down on their luck.
Lindsay Tisch: There are people living in caravans now.
CLAYTON COSGROVE: The gnome at the end of the garden, who keeps interjecting on me, should actually stop, take a breath, and listen. The other issue that the National Party members raised, in a sort of a race to win the redneck constituency, was that Māori, based on race, are getting a better tax deal. I will make two points about that.
Lindsay Tisch: Well, they are.
CLAYTON COSGROVE: I make two points to “Papa Smurf” over there. One is that a special tax rate for Māori has been around since 1939, and there has been the odd National Government in power since 1939. Why is there a special tax rate? Put simply—and I know that the scales will fall from that member’s eyes—it is because Māori authorities are different from commercial, private sector entities. Why? They have constraints on them that other commercial, private sector entities do not. Mr Tisch says he is a businessman. I say: “Wakey, wakey! Prove it to us.”
What are some of the constraints? Communal ownership is a constraint. Mr Tisch owns a business. If he wants to dispose of his business or his assets—and if his shareholders knew who were running it, they would probably want that to happen—he can sell them. A Māori authority does not have that ability. Yes, it has shareholders, and, yes, it has beneficiaries of those assets, but they are communally owned. I say again to that member: “Wakey, wakey! Get the concept!”. Those authorities cannot dispose of the assets. They have certain commercial constraints on them. They cannot market their assets as that member can, with his estate, or his business, or whatever he has. Therefore there is a disadvantage.
I ask that member this: why, if that policy is so wrong, did his Government and subsequent National Governments since 1939 not correct it? Why did Dr Lockwood Smith, who was in Government when there was a special tax rate, not stand up then and make the lofty, redneck speech he made today? Because deep down he knows that this policy is right. He sat on the Finance and Expenditure Committee, and I was chairman, and he made a positive contribution—more positive than he did today, I have to say. He knows that this is right because of the constraints on Māori authorities. [Interruption]
I say to Mr Tisch, who is interjecting, that I am dumbfounded that we have not heard from Dr Brash. Maybe the reason that he has not taken a call today is that, unlike Mr David Carter, a member of the C team, and unlike Dr Lockwood Smith, he actually deep down believes that this policy is right. Deep down he believes and understands—unlike Mr Tisch, Mr Carter, and Dr Smith—that this is appropriate, because he understands the commercial constraints put on Māori authorities.
I say in conclusion that we have been attacked because of tax rates. The only solution that the National Party put out today, in response to interjections from our side, was a flat tax.
Lindsay Tisch: Lower all taxes.
CLAYTON COSGROVE: Say it again, so that the people can hear! Mr Tisch says: “Lower all taxes.”—a flat tax. That is exactly the policy for which National was done over by the electorate, the policy that the people of New Zealand rejected—not once, but twice. They will do so a third, a fourth, and a fifth time, and for ever more. [Interruption] The ACT party member joins the cry for a flat tax; his leader wants one as well, and that is why he has only seven, or eight and a half, or nine members, or whatever it is.
One fact that the National Party will never stand up and acknowledge is that, regardless of what it says about our tax rates, we have achieved growth of 3.9 percent, one of the best in the OECD—
Lindsay Tisch: Ha, ha!
CLAYTON COSGROVE: Mr Tisch laughs. I thought he was a man with some commercial and economic acumen. Obviously, that notion has been blown away.
We have created 123,000 new jobs. Unemployment is at a 20-year low—4.9 percent. I come back to it: we get criticised by National members for our tax rates, but there is no policy solution from them. They fail to acknowledge that the more important thing is not the tax rate but what a Government does with the tax, what it does to redeploy that revenue to our communities where it is needed—to our working people, through housing, the health system, and social services, and so on. That outfit across the floor—I say “outfit” because it is not really a political party—never did that in 9 years, and that is why—[Interruption]
I can handle “Papa Smurf’s” interjections—no problem. I relish them, because every time he interjects he shows his ignorance, and every time he interjects he puts another nail into the National Party coffin, because he has learnt nothing and his party has learnt nothing. The people told that member twice, in two elections, that they reject a flat tax, that they reject his policy. But, no, National members have nailed their colours to the mast. I, as a Labour Party member, am pleased they have. I really am rapt they have not changed their policy. They have changed their spokesperson on finance three times, and the failed one got up to take the call on this bill. He is the one who spent only 5 minutes on the select committee, the failed one, the one who got sacked. Dr Brash has not got up and taken a call, yet he is the Opposition spokesperson on finance. He may well want to get up and take a call, because I think there is a shred of decency in Dr Brash. Probably, the reason that he has not taken a call is that he actually agrees with this bill.
I commend the bill to the House. I think it is sound legislation. I endorse Mr Copeland’s speech, and he made a fantastic contribution to the select committee. I hope we can get away from the redneck, racist, despicable sorts of antics that we have seen in this House, and actually talk about some solutions and the positive nature of this bill. I endorse the bill.
CRAIG McNAIR (NZ First) : I take pleasure in rising to speak on behalf of the New Zealand First Party, on behalf of my New Zealand First colleagues, on the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill. I had to take a big, deep breath to say that; it is a quite long title. But I am not going to criticise the Government for having a long title; we are not speaking to the title.
- Debate interrupted.