Parliamentary debates: Thursday, 26 March 2026

09:00

I just want to traverse briefly where we’d gotten through to last night. We had worked our way through Part 2 to around about—where am I up to?—the sale of excess electricity, so that was clause 19.

In addition to that, we had spent a substantial amount of time on the Minister of Revenue’s Amendment Paper 560. Now, that was a really important Amendment Paper. It was the one that introduced the assistance for families in this fuel crisis, giving them an extra $50 a week. As I’ve previously stated, the Labour Party will be supporting that amendment, but that Amendment Paper has probably been done over now and it is time to move on.

That’s my advice and observation.

Yes, indeed. I do want to outline what there is still to discuss in Part 2. There is a series of changes to the Investment Boost rules; there is a series of changes around the foreign investment fund and revenue account method rules; there’s a series of changes around employee share schemes; and, very importantly, there’s an entirely new Amendment Paper, as well. It arrived earlier this week—Amendment Paper 559. There is a very substantial change in that Amendment Paper around infrastructure funding and the thin capitalisation rules for infrastructure funding. There are those major topics still to canvass in Part 2.

There’s a lot of work still to do in this and, in particular, that work on the Amendment Paper because, of course, that has not been through the Finance and Expenditure Committee. The select committee did some work on those thin capitalisation rules, but we did not have the legislation in front of us; we were just talking general policy. So, as I said, a lot of work to do in this section.

Going back to where we left off, I want to go to—

Just at this stage, given what the member has indicated about how much work there is to do, the back and forth nature would probably assist, rather than five-minute speeches on each part of it—that would maybe indicate progress.

That would be great, Mr Chair. Of course, that will depend on the Minister in the chair participating.

It takes two to tango.

I note that the Minister in the chair is not actually the Minister responsible for this bill, so that could be a little bit tricky at this stage—

Brought out the big guns—impact player off the bench.

—though I’m sure the Minister in the chair at the moment will, in fact, do his best. I’m sure he’s looking forward to every moment of tax conversation—

Oh, I put my hand up for this.

—and I’m sure he’ll be ably assisted by the officials who are there.

The Minister will be aware that his voice does get picked up on the microphone, and it goes out—

Oh, I’m all big for Hansard.

Of course, if the Minister responsible for the bill is not here, it does make it rather difficult to have a whole lot of back and forth, but let’s give this a go.

I just want to start on clauses 33 to 35. These are a series of changes to the Investment Boost rules or the immediate write-off rules, the accelerated depreciation rules—so the rules that were brought in on Budget night last year. We debated them at the time and, of course, the difficulty with legislation brought in on Budget night is that, again, it hasn’t been through a select committee process, so it can be very hard. Try as they might for officials and drafters to get them perfect, it does take time to get tax rules sorted out.

The first question I want to ask the Minister—and given that we’ve asked for the back and forth—is what feedback the Minister and Inland Revenue were getting that made these amendments necessary. There would have been something that came up that triggered this, either from within Inland Revenue or from within the tax community that said, “Hey, you’ve got to get this right.” I’d just like to know what feedback the Minister and Inland Revenue were getting.

If we’re going to do a back and forth, we actually need the Minister to participate in this, and, as I’ve said, there’s a long way to go on this bill, so I’m going to give the Minister a little bit of a chance right now. Is he able to answer the question as to what information or advice he was getting, and that Inland Revenue was getting, that made these changes necessary?

09:05

I move, That debate on this question now close.

Mr Hamilton, just bearing in mind what you’ve heard, bearing in mind what took place last night, you’ll be aware there’s quite a wee way to go here. I won’t say you’re trifling with the Chair, but just make sure the bill is in front of you and be following progress yourself, and then you might get some idea of where we are and the likely success of a closure motion. I might have to say that it’s fairly early, given the progress we’re making through the bill at the moment, and given the message from the Chair last night.

Thank you, Mr Chair. I am waiting. I’m sure the officials who are there will be quickly drafting a response for the Minister. It is actually quite important to know where the information was coming from about the need to introduce these changes to these accelerated write-down rules.

I want to go to replacement section DI 4(a)(viii), inserted by clause 34B. Let me see if I can find exactly the right spot; it’s quite interesting. What I want to know there is, it expands the meaning of “improvement”—oh, yes, I’ve found it here now. It expands the meaning of “improvement” and it extends it to all asset classes, including petroleum and mining development expenditure.

In the original legislation, we just had the word “improvement”, so there could be an accelerated write-down for improvements, but now we’ve actually changed that word “improvement” to “alteration, extension, or repair”. I’m just asking what was going on there, what advice the Minister was getting, and what advice officials were getting that said that the word “improvement” wasn’t sufficient and that we actually needed that rather clarified definition of what an improvement was to “alteration, extension, or repair”. If the Minister is able to answer that question

No? Well, in that case—this is one of the frustrations. I know the Minister in the chair, the Hon Matt Doocey, is a good guy doing great work in his portfolio around mental health, but it would be helpful if we had the Minister who was responsible for this bill. I appreciate things happen, but it is very hard to discuss a bill and to take committee stage seriously if we cannot get responses from the Minister.

Carrying on from here, that need to look at improvement, alteration, extension, or repair—if we go to new section DI 4B, and it’s the “Treatment of certain items as assets”—what it does is it says a person can get this accelerated write-down, this accelerated depreciation for farm development expenditure or an immediate write-off, and it extends that immediate write-off to farm development expenditure. It’s got the definition of farm development expenditure: “all petroleum development expenditure”; all mining development expenditure incurred by a person”; and “an alteration, extension, or repair of an asset of the type in any section”.

Now, this is kind of interesting because, of course, those development expenditure rules are sitting there in order that taxpayers who are developing an asset can capitalise that and they get, if I recall correctly, more immediate write-offs, but now they’re going to get this accelerated depreciation, as well.

There are two questions here. The first question is: why was this type of expenditure—the farm development expenditure, the petroleum development expenditure, the mining development expenditure—not included in the accelerated write-downs in the first place? Actually, there are three questions. The second is: again, what advice was the Minister or officials getting that it was necessary to actually include this explicitly in the accelerated write-down rules?

The third question there is—and this is where we need the officials’ advice, because although I am familiar with tax, obviously, I haven’t worked in it directly for eight years, so there’s some stuff, the very keen detail, that I’m not sure on. I’m looking for some reassurance on this. I’m assuming this doesn’t allow a double deduction, but if I could get some clarity on whether or not that actually allows a double deduction. I’m going to give the Minister an opportunity to answer some questions, if he so wishes.

09:10

Thank you, Mr Chair. Just to acknowledge the questions from the Hon Deborah Russell; she seems to be taking the lion’s share of the work for the rest of her colleagues this morning. As pointed out, my portfolio is around mental health and what is the connection—well, I suppose when the Opposition was in Government and called tax “love”, then, obviously, we’ve brought in some mental health support.

“What feedback did IRD get that triggered this clarification?”—the Hon Deborah Russell asked about, referring to section 33. The advice I’ve received involved full consultation with the tax community to understand the gaps in the legislation and an extension to second-hand good clarification required to provide certainty for investment decisions. Just to repeat that: full consultation with the tax community, clarificatory to give certainty—and, I suppose, when we think about the Government side of the House, it is around giving confidence and giving certainty, because, I’m sure you agree, we need to give certainty for investment decisions to be made.

09:11

Thank you, Mr Chair. I just want to carry on a little bit there, because it says “full consultation with the tax community”. Now, I appreciate that this was Budget night legislation. These rules around accelerated depreciation came in on Budget night last year, and the nature of Budget legislation is such that it is kept reasonably quiet, because announcements need to be made. A further detail around this is that, of course, people who knew this legislation was coming could well have delayed asset purchases until they got the advantage of the accelerated write-down. But then the Minister talked about full consultation with the tax community. Now, that’s an interesting discussion. Does this mean that there is a commitment within Inland Revenue and by the Minister around Budget legislation, or, indeed, any legislation that is introduced with little notice—again, I appreciate the necessity to do that—to doing ex-post reviews and ex-post consultation in order to ensure that the legislation really does meet the needs of the community?

09:13

Thank you, Mr Chair, and thank you to the Minister for the time in the hot seat this morning and to answer some of the questions, and there will be many coming from this side of the House as we work our way through what is a very long and complex bill.

Now, the question I have relates to clause 34D, “Section DI 5 amended (New investment asset deduction)”. Really, the issue I have with this question and with the section I want to get to is—as the Minister himself has expressed, he is not an expert in the area of tax; my sense is that there are a lot of New Zealanders who are not. For that very reason, understanding exactly what is in here and how that will impact New Zealanders who don’t necessarily take the time to read through the entire Act would suggest that, actually, our job here is to understand and interpret a lot of this content so that it’s much easier for New Zealanders to understand the ramifications and, indeed, for all of us to understand the ramifications around the decisions we make about whether or not we support this.

Coming to the specific subclause (1AC) in clause 35, in section DI 6, where it says it’s inserting as subsection (2)—and I just want to read the passage here: “For the purposes of subsection (1), if the amount of person A’s deduction is less than the amount (the available deduction amount)”—it goes on—“they would have been allowed if they had used the asset wholly in deriving assessable income or carrying on a business for the purpose of deriving assessable income,”. Thankfully, there’s a bracket at this point, which allows me to catch my breath. The passage goes on: “the applicable amount referred to in subsection (1) is reduced by the available deduction amount for the purposes of quantifying the amount of depreciation loss under subpart EE or the amount of a deduction under subpart DO, DP, DT, or DU, as applicable.”

The question is a very simple question about what is, essentially, a very complicated series of words in the bill, which really is: what does that mean in plain English, and can the Minister give us an assurance not just that he understands it but that we are all able to understand it and that, most importantly, the New Zealanders for whom this will apply are able to understand exactly what that means?

09:16

I do want to go to a couple of very specific questions now. They will be my last questions on this part, and I hope the Minister in the chair, the Hon Matt Doocey, is—sorry, this section, before I move on to the next major topic of employee share schemes. But I want to understand, in particular, the policy decision around DI 4B(b) and (c). This is new section DI 4B, subsection (b) and subsection (c), inserted by clause 34C. Now, we’ve been allowed a deduction for development expenditure. I just want to remind the Minister that he hasn’t yet answered my questions on development expenditure in general, and so I would appreciate an answer on those. But DI 4B(b) and (c) give accelerated write-downs for all petroleum development expenditure and all mining development expenditure.

Now, there is, of course, a broader question around this, and that is to do with, certainly in the case of petroleum development expenditure, whether we should be encouraging petroleum development expenditure in our Income Tax Act, given the pressing needs of climate change. There’s a policy decision taken here in the tax Act to support fossil fuels. I get the reason for consistency within the tax Act, but could the Minister please explain why it is important to support fossil fuels in this way, given the crisis the world is facing in terms of climate change?

I also want to point out that, no matter what, the type of fossil fuels that are available in New Zealand would not replace the type of crude that we get from Iran and from the Middle East. It’s not the right quality of crude. So why are we mining these fossil fuels in New Zealand, and why are we encouraging these in New Zealand?

There’s a second point here, and it says “all mining development expenditure”. Now, in the Labour Party, we are not opponents of mining at all. We recognise the wealth it can bring to a country. But we are opposed to new coal mining. This is all development expenditure for new coal mining. I’m really worried about this. Would this create an incentive, for example, for expanding the mine on the Denniston Plateau? There’s some stuff here that just really goes against our conservation aims and it goes against the rules we have for what we’re trying to do in terms of climate change.

Right at the start, when this bill was introduced on Budget night, it was clear that the accelerated write-down was available for fossil fuel mining. We opposed it then, but I also oppose it in this sense. Even though we thought the accelerated write-down was a good idea, extending it to fossil fuels was an absolutely bizarre thing to do.

So you don’t support affordable energy.

I wonder if the Minister could just give some reason—take a call—

I don’t need to. Affordable energy.

—behind the policy decision for allowing petroleum mining and allowing coal mining to be supported in this way. Take a call, David—take a call.

09:19

Thank you, Mr Chair. First, in response to my Canterbury colleague Reuben Davidson, who is the rising star of the Labour Party—and, I must say, full credit for innovativeness around filibustering. He is reading out a whole section and then asking the question of what it means in plain English. I look forward to more of those questions.

To the Hon Dr Deborah Russell, there were questions around what the gaps were that needed to be filled. The advice I’ve received is that there is no significant change from the original legislation. It covers other types of asset classes other than depreciable property, where it was always intended to include improvements, but the definition wasn’t included in relation to the relevant sections. The proposed change introduces the definition to those sections.

To the question around double deductions, there will be no double deductions. To the extent that a taxpayer claims Investment Boost, they will get only the balance of the deduction. The deduction is limited to the expenditure.

To the question from the Hon Dr Deborah Russell around why it is so complicated for new section DI 6(2) in clause 35(1AC), this section is complicated because it contains integrity provisions. Most taxpayers will have simpler circumstances, and so the approach will be simpler.

09:21

Thank you, Mr Chair, and thank you to the Minister in the chair, the Hon Matt Doocey, for the answers—

Reading out his responses.

—to previous questions, and, yes, as my colleague points out, for reading out his responses to my questions that I’d asked previously. The—

And what are you reading?

I’m reading the bill, Minister. I’m reading the bill—

Word for word.

—which is what my questions relate to.

Hasn’t even come to the House and prepared questions.

Minister, I won’t warn you again. When you are engaging cross-party, you have a microphone, which means you have an advantage over everyone else in the Chamber. If flippancy goes through the Chamber, it does give you an advantage, and so please take the advice—

He could have asked proper questions, though.

Well, I’ll decide that; not you, as Minister.

Thank you, Mr Chair. I’m now wanting to ask some questions specifically around the clauses in this bill—which is the document I have in front of me, for the Minister’s reference—around the employee share scheme rules. This is really important, especially for New Zealand’s economic development or economic growth, depending on how you want to interpret the title of that portfolio—but it’s really important for both economic development and economic growth, because it’s around the rules that we put in place in law to empower and enable the start-up sector in New Zealand.

Now, we’re known around the world for being very, very good, if not the best in the world, at innovation and innovating, and our start-ups the length of the country—many of which I’ve had the privilege to visit and see what goes on—are leading the way with new ideas and with developing talent locally and attracting talent internationally. A big part of attracting and holding that talent in our innovation sector comes down to allowing those employees and individuals to be invested not just in the realisation of the idea but also in the potential growth and monetisation that transfers from intellectual property to initial public offering that those companies are seeking to have.

What we’re looking at in this section of the bill are the rules and regulations put in place around the issuing or transferral for an employee to become a share scheme beneficiary. There’s a specific reference in the bill at new section EA 4B, “Deferred tax for unlisted employee share schemes”, in clause 40, where new section EA 4B(2) says, “The employer may, at the time the shares are issued or transferred, designate the shares issued or transferred to an employee share scheme beneficiary as employee deferred shares.” Then there’s an underlined section here that gets very interesting. It goes on to say, “If the employer makes that designation, the employer must notify both the Commissioner and the employee share scheme beneficiary of that designation”—and this is the number—“within 20 days after the date of issue or transfer, or by a later date allowed by the Commissioner.”

My question for the Minister here is: what’s the process for the designation of that later date, is there discretion, and are there specific instances where the Commissioner of Inland Revenue would be asked case by case, or are we looking here at a blanket ruling that could extend out that 20-day period? I mean, 20 days can sound like a long time, but 20 days is four weeks. In our innovation and start-up sector, we know that a lot can happen in that period of time and, also, if you’re dealing with time zones in different countries and investments from other territories in other countries and from foreign investors, as well, that could all be very difficult to progress in that 20-day period.

Those are my questions for the Minister: what’s the process; where is the discretion, if there is any; would there be specific instances of variation of that 20-day limitation, or is there likely to be the facility for a blanket ruling that would shift that 20-day discretion for the commissioner?

09:25

Thank you, Mr Chair. In response to the Hon Deborah Russell, who asked her question as to why include petroleum and mining expenditure, I’ve been advised that the decision to include petroleum and mining expenditure—these were included in Investment Boost so that all expenditure and capital investment is treated equally. It is a good policy that aims at driving productivity for all sectors.

09:26

I thank the Minister in the chair, the Hon Matt Doocey, for his answer to that question. I think that we debated it substantially at the time on Budget night, and if you’re going to do that—I don’t agree with doing it, but if you’re going to do that—then a consistency reason applies.

We have now moved on to the employee share scheme rules. These are clauses 39 to 41, and my colleague Reuben Davidson has already talked about some of the issues there. I just want to draw the attention of—it really got me. It’s new section EA 4B in clause 40, and I want to draw the drafters’ attention to this, because I think there’s been a typo or a mistake. There’s section EA 4B, then there’s section EA 4B(1), section EA 4B(2), section EA 4B(3)—and that’s quite straightforward—and then there’s section EA 4B(4B). I’m looking at it on page 28, halfway down the page, and I think that it should be subsection (4), not subsection (4B).

Hopefully, that will get picked up and tidied up somewhere, but then it goes to section EA 4B(2), and so we’ve got two subsection (2)s in there now. I’m pretty sure that there are just some typos going on somewhere, but if the drafters and the officials, who I know will be listening in the room outside, because there’s a suite of officials working on this bill—as I’ve said, I’m pretty sure it’s just a typo, but it would be nice to get that one tidied up. I guess that it would have been tidied up at some stage, but it certainly would help in debating it, and this just goes to the fact that I did actually read the bill, unlike my colleagues on the other side of the Chamber, it seems.

Aside from that issue with the typos, I was particularly interested—and the reason why I picked this up was because I was looking at new section EA 4B(4B), and I thought that that just can’t be right—in where it’s talking about the liquidity event date. In terms of the liquidity event, I guess what I’m concerned about here is whether we meet the arm’s-length criteria, particularly. Obviously, at the point at which we’re trying to establish a liquidity event, we need to be sure that the value established is correct. The best way to do that is through having an arm’s-length transaction. This applies particularly from, under new subsection (4B)(a)(i)—which should be new subsection (4)(a)(i)—the date on which it becomes a listed company. At that stage, for the shares which will be issued to an employee, there is a value established, and so that’s quite a good date.

Then, new subsection (4B)(a)(ii) says, “the date the employee share scheme beneficiary”—that’s the employee—“sells or transfers the shares to a person who is not associated with a beneficiary”. I wonder if the Minister could explain just the extent to which that term “not associated” is working: who counts as being associated with the beneficiary and who counts as not being associated with the beneficiary? In this case, we do want to be very, very sure that we are establishing a genuine arm’s-length transaction to establish a genuine value, and so it would be great to clarify exactly how it meets that test.

The other thing that I was fitting in there was the date on which shares are cancelled, including by the company ceasing to exist. So the employee will have been given a whole lot of shares, as is common in start-ups, but then, as is equally common in start-ups, start-ups don’t always succeed, and people have to try several things before they succeed, and then the shares achieve zero value, and that counts as a liquidity event, too. What then happens to the employees’ remuneration? How is that, sort of, figured into the—I guess it’s just a non-event, in a sense, but if the Minister could clarify that, that would be very helpful.

There was just one other thing—oh, no, I think we can move on. Those are some of the questions I wanted to ask—oh, no, I want to ask one other thing. In this new section EA 4B, inserted by clause 40, I want to go to EA 4B; should be new subsection (4)—

What page?

Page 28, new subsection (4B), it talks about the shares. The date is obviously the sale date, and then it talks about “unless the shares are subject to a restriction that prevents their disposal”. So it means the date on which the restriction ends. I’m just trying to think about that—if the Minister could clarify. I’m taking that it’s the instance where perhaps the shares are listed, but the employee is not permitted to dispose of them until, say, a year after the listing date or something like that. Now, that might be a fairly common thing to do to ensure that the employee’s expertise stays with the start-up and so on, or that they’re—so I just wonder if the Minister could clarify exactly what sorts of restrictions might be envisaged there.

Again, when it’s coming to “associated persons” or not associated persons—so trying to establish that arm’s-length thing: the nature of restrictions, does that create a relationship that fits within the associated person rules, and things like that? I would hope that the restriction has to have a very certain date to it, otherwise I could see trigger events or a very certain trigger event that then says, no, this restriction is at an end. Otherwise, I can see the possibility for manipulating the date at which there is a liquidity event and, therefore, manipulating the value of the liquidity event. I wonder if I could just get some clarity around that, please.

09:32

Thank you, Mr Chair. Just to further probe into one of these clauses, clause 41 here, which is “Section EA 5 amended (Income from disposal of original shares under share-lending arrangements)”. In subclause (2B) here, it says, “In section EA 5(1)(c), replace”—and then it quotes—“ ‘in the following income year (the later income year)’ with ‘in a later income year’.” What you’ve potentially got there is a shift, in my reading of it, and I’m seeking some clarity from the Minister in the chair, the Hon Matt Doocey. If you’re saying, “in the following income year”, that’s very specific, that’s next year; if you’re saying in “a later income year”, that’s very broad, that’s potentially any year following the one you are in, which implies, or could imply, a period of deferral—well, an infinite period of deferral, because you’re saying “a later income year” and not “the following income year”.

I’m really seeking some clarification from the Minister about his understanding of what that means and how broadly that could be applied, and what risks that might pose—because, all of a sudden, something that had to be tidied up in the following income year now may never be tidied up or could be tidied up in two years, 10 years, 50 years. So I’d like some clarification from the Minister about exactly what the change there in clause 41(2B) will mean.

09:34

Thank you, Mr Chair. In response to the question around clauses 39 to 41, employee share schemes—is there discretion for the 20-day period? I’ve been advised that, yes, there is.

To respond to the Hon Dr Deborah Russell—we will now call her the “Eagle-eyed Deborah Russell”: are there typos, as pointed out? I thought it was a very good question and did leave the reader with that thought, but I have been advised that, no, this is not a typo. The numbering will be updated in the assent version of the bill.

09:35

I think there are still a few more questions that the Minister in the chair, the Hon Matt Doocey, hasn’t answered yet, but I think we’ve dealt with the questions around the employee share schemes. That still leaves a couple of major topics in this section: one is the foreign investment fund (FIF) and revenue account method (RAM) rules, and the other is the matter introduced in the Minister’s Amendment Paper 560, which has not been discussed in detail by the Finance and Expenditure Committee—although we discussed some of the policy proposals there—and we did not have submissions on it, so I do want to cover some of those issues quite carefully.

Aside from the questions that the Minister hasn’t been able to answer yet—and I’m sure he will do so in due course—I want to move to clauses 51 to 67B, and that’s the revenue account method rules for the alternative to the foreign investment fund rules. First of all, just before I do that, I just want to note a couple of other things to do with the accepted financial arrangements in section EW 5, where clause 44 replaces “50,000” with “100,000”, and in section EW 57 and a few others. I think it’s EW 57 replacing “1,000,000” with “2,000,000”. I think these are good changes. Those thresholds were put in place a long time ago, and I think there was a real need to update those thresholds for the financial arrangements rules. So there’s no particular need to discuss those. We agree with those changes, and I’m sure that, had we been in Government, we would have been doing much the same.

Moving on to the foreign investment fund rules. Now, this is a very, very technical area of the Income Tax Act. Very roughly, how the rules work is that if a person has, I think it’s $50,000 of foreign shares, they have to value those shares at the start of every year and then treat 5 percent of the value as taxable income and pay tax on that—so not pay 5 percent as tax, but, say, 5 percent of that is income; 5 percent of that value is income; and then the income is included as deemed income in the person’s tax return. That is, of course, a tax on unrealised gains, or you can also get unrealised losses out of it. There are some particular difficulties associated with that, especially for shares that are not in a listed company, or shares that—because, in the end, there’s no mechanism for establishing a value.

And, of course, there are also particular issues for American citizens who are tax residents in New Zealand. The United States taxes its citizens, not its residents, and there were some particular interactions with the capital gains tax rules in the United States and the FIF rules here in New Zealand, which have been creating genuine difficulty for people.

We’ve now introduced the revenue account method. That’s so any dividends received are taxable as a person’s marginal rate and a gain or loss in any value of shares is going to be included in income and tax, but the value would be discounted by 30 percent. I think that’s the way it works. Look, the policy intent is to reduce compliance costs for taxpayers and, really, to remove not just compliance costs but also to give people a way around having to pay taxes on unrealised value when they may not actually have the cash in hand to do so. It really has been a point of friction in the tax system.

Nevertheless, I want to understand when a person may use the revenue account method. The person has to be a RAM taxpayer or a RAM interest—I have to say, that acronym brings to mind sheep, but OK; I hope our farmers don’t take this as an incentive to start using this method, either. I want the Minister to clarify exactly who may be a RAM taxpayer. There’s a little bit of confusion there; it’s hard to work your way through this. Perhaps a RAM taxpayer is a person who’s a—if the Minister could just set out in clear words what a RAM taxpayer is.

09:40

In response to the Hon Dr Deborah Russell—the question around who is associated with a beneficiary and who is not—I have been advised that the meaning of “associated person” is in Subpart YB of the Income Tax Act. There are no special rules for its proposal. To clarify, the ordinary rules apply.

What happens to employee remuneration on the date shares are cancelled? I have been advised that, when shares are cancelled, an employee will generally be compensated for the loss of the shares by the employer. This may be in the form of a cash payment or different shares of the same value. This is common in share restructure situations. This will trigger a tax liability.

I move, That debate on this question now close.

I’m aware we’re still moving, but let’s keep moving.

09:41

Yep. I’ve specified very clearly the two areas where I feel as though we need to do some more work yet.

Just carrying on looking at a revenue account method (RAM) taxpayer, I want to understand, then, what a “RAM interest” is? There are two definitions here, which I think we could do with plain English for. I know there are a number of fairly ordinary people who this affects who want to understand whether or not they can now be a RAM taxpayer or whether they have RAM interest. We’re looking for a plain English version of what a RAM taxpayer is and what a RAM interest is.

I think it’s really important here what date this applies from. I recall, when I first became a member of Parliament—it’s getting on for close to nine years now; it’s hard to believe this is my ninth year in this place—I immediately had people approaching me over this particular issue: people who had lived in New Zealand for some years but still had shares overseas, particularly in the States. I want to understand if those people can now use this RAM method or whether they are still required to continue using the standard foreign investment fund rules. Now, as I said, this is a point of friction for those people. Is this going to solve that point of friction for people who have been here for a very long time indeed?

09:42

Thank you, Mr Chair. I appreciate that the member the Hon Dr Deborah Russell is going clause by clause, but I did have a question that I wanted to ask now that is slightly, I think, not quite where she was, because I do have to leave at 10 o’clock.

My question is around the Order in Council mechanism for the FamilyBoost package and whether there was consideration given to using that mechanism for the Amendment Papers and the fuel crisis relief package that the Government is offering. The change that this bill is making is that it allows the rates of the FamilyBoost to be set via Order in Council, which is, of course, a much simpler mechanism than setting them via legislation. Was there consideration given to making it so that the boost that the families are getting through the fuel crisis relief package is done via that mechanism, as well?

We know that this crisis is going to be quite a fast-moving one. We can’t predict the future. We don’t know what’s going to happen. It just strikes me that the Order in Council mechanism is a much better way, potentially, to set the rates that are in the Minister’s Amendment Papers rather than going through the changing of legislation, because the flexibility that it offers means that you can adjust the rates up or down depending on the price of fuel and depending on what’s happening with the international markets. That’s just my very quick question to the Minister, and I’m looking forward to an answer to that.

09:44

As well as a revenue account method (RAM) taxpayer and RAM interest, there is then an “extended” RAM taxpayer. Now, that’s kind of an interesting—

Ha, ha!

Yeah, talking about extended “rams”, I think Suze Redmayne has probably got a little bit of information to share here! What’s an extended RAM, Suze? That’s an odd kind of thing to have: not just a RAM taxpayer but an “extended” RAM taxpayer. If the Minister could clarify: why might you have something that is extended further?

The other thing I want to be really clear about—and I think people at home are going to need to be very sure about this too. It’s sitting here in the legislation. It says that a RAM taxpayer has to be a “natural” person—no companies, and so on. Now, again, if the Minister could just explain, and I appreciate it is a perfectly sensible rule, why a RAM taxpayer has to be a natural person—so a company or a trust, or whatever, cannot be a RAM taxpayer?

09:45

Isn’t it great to be talking about a RAM taxpayer and not a ram raid!

What is revenue account method (RAM) interest? It is not a liquid foreign share, which means not easily able to be sold or converted, such as not on the stock exchange.

When may a person use RAM? I have been advised that the person must be a New Zealand tax resident on or after 1 April 2024, and the person must have been a non-resident for at least five years before becoming a New Zealand tax resident.

To the question from Reuben Davidson around clause 41, section EA 5—the question was about why the change from “the later” income year to “a later” income year—the relevant disposal or return of shares can occur in more than one income year, and later for a returning share transfer. This is why the change was made.

09:47

I’m grateful for the explanations that the Minister, the Hon Matt Doocey, has made around the revenue account method. It is a highly technical piece of legislation, so, I think, rather than pursuing it further, I actually want to move on from this now. I appreciate that we have been spending a large amount of time on this part.

Nevertheless, there is one more set of rules that I want to have a really good look at, and it’s actually going to be quite important to have an extensive look at this, because they are rules around thin capitalisation. Now, these are contained in the Minister’s Amendment Paper 559. This Amendment Paper was made available, I think, on Monday of this week. I’m pretty sure I picked up a copy of it then. It might have been earlier; it might have been a little bit later. This is, I think, the first time we’ve had an opportunity to have a look at the actual legislation. The particular ideas were discussed in select committee, but not the legislation, so there is quite a bit of work to do on this section.

Just to set the context for the committee, a brief explanation of the thin capitalisation rules: what multinational companies could do, if you’re not careful about it, is locate all of their debt in New Zealand and get a deduction for it even if they didn’t actually have a lot of their investment in New Zealand. It’s a pretty standard strategy for shifting funds around the world and getting the best tax deduction possible. What the thin capitalisation rules do is make sure that companies don’t load a high proportion and commercially unrealistic level of debt into New Zealand and claim high deductions. I think, under the thin capitalisation rules, firms can have up to 60 percent debt financing here or, if they look at the average debt financing of the company across the world, they can have 110 percent of the multinational’s average debt financing located here. What that does, then, is ensure that the deductions that are taken in New Zealand are fair and reasonable.

The trouble is that that can, in some ways, be a barrier to some investment, and we do want to ensure that we encourage inward investment, as well. We know we need it around infrastructure. These thin capitalisation rules are now being modified to ensure that, where we’re getting inward investment for infrastructure, those companies can get a reasonable deduction. Particularly, they have to have third-party debt and all sorts of things going on there, but, provided some infrastructure investment, they can get the full deduction. I hope the Minister in the chair is appreciating that explanation, as well, given that the Minister who is responsible for this legislation is not able to be here at this time. That, of course, happens. We understand this. The Minister in the chair is doing an excellent job—an excellent job.

There are two new clauses here in the Minister’s Amendment Paper 559: new clauses 69B and 69C. I have to say that 69B is a little dull—sorry, drafters, legislation officials—but 69C is where all the work is done. What 69C does is it introduces a new section FE 7C. Now, FE contains all the thin capitalisation rules, so this is the obvious place for these new rules to go in.

I want to go to new section—oh, I’ve managed to put an “FEC” there; clearly, I’ve just got the Finance and Expenditure Committee on my mind—FE 7C(1)(a). What this does is it says that people who can use this exemption to the thin capitalisation rules for infrastructure have to meet the requirements of section FE 2(1)(b), (c), or (cc). Now, FE 2(1)(b) is a non-resident company, (c) is a resident company that is more than 50 percent overseas owned, and (cc) is a resident company controlled by an overseas trustee. Roughly, that’s how it works.

This is the question for the Minister: new section FE 2(1)—why would a non-resident who is not a company not be able to claim this deduction if they are engaging in infrastructure, if they’re providing funding for infrastructure? Now, I get that that’s a highly unusual situation, but why would they not be able to claim that deduction, a non-resident who is not a company; why not FE 2(1)(cb), a resident company that, effectively, has overseas control through counting of its holdings?

Now, people who’ve worked in tax will know that there are these wiring diagrams showing capital flows and cash flows and revenue flows and deduction flows and all sorts of ownership flows. Those wiring diagrams are very, very complicated, and you count up those holdings. What I want to understand from the Minister, given those who can use these exemptions, is: why is it that FE 2(1)(a) and FE 2(1)(cb) are not included in new FE 7C(1)(a)?

09:53

Thank you, Mr Chair. In answer to Francisco Hernandez’s question—who said he had to leave at 10 o’clock, so I thought I’d expedite that question a bit quicker. He had to go and—

Busy guy.

—well, that’s right—do what Green MPs do, like play hacky-sack or something like that! Did we consider doing the in-work tax credit by Order in Council? No, in-work tax credit rate changes are generally made by primary legislation. The reference to Order in Council relates to setting a date when support will stop, not for setting the rate itself.

For the question by the Hon Deborah Russell, who I never thought I’d hear say that she found part of tax legislation dull—I mean, those nine years are changing you slowly. I never thought I’d hear that. It’s surely all exciting. Who can use extended revenue account method (RAM): I’ve been advised “extended RAM taxpayer” are RAM taxpayers who are also being taxed in another country. This distinction was necessary because they needed RAM to apply to more investments to resolve the double taxation issue.

09:54

I move, That debate on this question now close.

Keep moving, but with some pace.

I am keeping moving. I want to move on to some further questions on this Amendment Paper 559 that was just dropped this week, when we haven’t seen the legislation previously. I appreciate that, in the absence of the Minister responsible for this legislation, the Minister in the chair, the Hon Matt Doocey, is doing an excellent job. Nevertheless, it’s very hard to discuss some of these technical issues and to get the policy intent behind them because of this.

I want to look at new section FE 7C(3), and this is one where I just want a confirmation of this. It says, “For the purposes of applying this subpart to any other person”. This is new subpart FE 7C or maybe FE—if they could clarify whether that’s subpart FE or new section FE 7C, that would be helpful, because I’m just not quite sure what, in FE 7C(3), this subpart refers to. “For the purposes of applying … to any other person”—so another person who might be able to claim the exemption for eligible infrastructure. I’m envisioning a situation where two entities are trying to claim the exemption for eligible infrastructure, so you can’t count the debt interest assets and non-debt liabilities of the eligible infrastructure entity and so on. If the officials could clarify that that’s to prevent a double-dip on this. I think that’s what their work is doing. I might be getting it wrong, but, again, because I’ve only just seen this legislation, we haven’t had an opportunity to discuss in the Finance and Expenditure Committee. I’m unsure as to exactly what that work is doing.

Carrying on from there, on FE 7C(4), we have a “non-QID”—or a non “kid”, “quid”, something or other—interest. I’m just disappointed that officials missed the opportunity for a full-scale quidditch reference. They could have done that. What FE 7C(4) does is it sets up an amount of income that gets counted as income. I was puzzled by that, because it’s got the subtitle “Income” there. Of course, that led me to the question: this is all supposed to be enabling a deduction, and I’m not quite sure how the mechanics of this are working. Where is the deduction itself enabled? Or is it the case that, first of all, we have the thin capitalisation rules that prevent a deduction, and then this new section FE 7C prevents the prevention of the deduction and we’re doing a double negative here? If the officials could just clarify how that mechanism actually works.

I want to make sure that there is a deduction enabled somewhere. But if it’s done via cancelling, as it were, the prevention of the deduction, it would be helpful to know exactly how that mechanism is located within the Income Tax Act. So that’s a couple of questions for the Minister there.

09:58

High productivity this morning. The question was: why would a non-resident that is not a company not be able to claim a deduction? I’ve been advised the provision is focused on companies because these are the most likely taxpayers using it. Other taxpayers can always incorporate a company to access this thin capitalisation treatment.

The next question was asked by the Hon Deborah Russell. Why does foreign investment fund revenue account method (RAM) only apply to natural persons and certain trusts—e.g., family trusts? The RAM proposal was intended to remove tax barriers to migration and settlement of people in New Zealand and returning New Zealanders, hence why that is worded in this way.

09:59

Thank you, Mr Chair. I’m very grateful for that answer and, of course, that makes good economic sense to encourage people to migrate into this country. I commend the Minister and the officials for introducing that change.

Carrying on, on new section FE 7C, I want to go to FE 7C(7)(a). We’ve got “eligible infrastructure entity” and we’re trying to define what that is. It means a person who is carrying on a business or project of “creating, operating, maintaining or upgrading qualifying infrastructure assets the person owns;”. Now, I’ve got some serious concerns around those qualifying infrastructure assets and I do want to discuss those in a moment, and “creating, operating, maintaining, or upgrading” seems reasonable for the actual asset that is being created—this legislation is supposed to be enabling or encouraging infrastructure development—but then, for eligible infrastructure, it says “any activity in New Zealand that is ancillary to or facilitates the activities described in subparagraph (i) if the person carries on any such activity;”.

What’s going to be “ancillary” to “creating, operating, maintaining, or upgrading qualifying infrastructure”? I just recall that when we were discussing the accelerated write-down rules a short time ago, one of the things that we discussed there was how improvement had been expanded to maintain, develop, or something like that—the actual definition of “improvement” had been expanded into some particular words. I’m really worried that “any activity in New Zealand that is ancillary to or facilitates the activities” is going to be something that subsequently gets expanded, as well, or needs further explanation.

If we could have some examples, maybe, from officials of what sorts of activities would fall into that “ancillary to or facilitating the activities”. I think 7(a)(i) is pretty clear, but 7(a)(ii) is somewhat unclear because of that word “ancillary” and also those words “facilitating the activities”. If the Minister of Revenue is able to answer that, that would be helpful.

10:01

Thank you very much, Madam Chair. Good morning. The question is, who is the “any other person” referred to in new section FE 7C, added by clause 69C in Amendment Paper 559? I’ve been advised that thin capitalisation rules apply on New Zealand group level. When an exemption applies to an entity that is part of a group, the normal thin capitalisation calculation applies to the rest of the group, disregarding the entity applying the exemption.

I’m going to take a call from the Hon Dr Deborah Russell, but I do know, in consultation with the previous Chair, that we’re getting pretty close in this Part 2. I know that you’ve been honed into this the whole time, so a couple more specific questions would be really good.

10:02

Thank you, Madam Chair. I note that this particular set of legislation only dropped this week. It hasn’t been examined in the Finance and Expenditure Committee—it’s the last major topic I wish to examine in Part 2.

I’m just asking to—

Yep, and I’ve been moving.

I’m looking specifically to you as the member who’s been honing in on this. Thank you.

I’m going to keep on moving clause by clause through, very steadily.

Very quickly, questions and not comments. OK?

New section FE 7C(7)(b)(ii) added by clause 69C in Amendment Paper 559—and this is really interesting. It’s talking about assets and which assets are recognised in the balance sheet, and it’s subparagraphs (7)(b)(ii) and (iv) that are giving me concern. In terms of valuing the assets, we have “tangible assets:”, “financial assets:”, and “deferred tax assets:”, but there are two there—“intangible assets:” and “goodwill:”. Now, how are they valued? This is really worrying me because, of course, goodwill and intangible assets are subject to quite a bit of opinion—as it were—in terms of their value. There’s an opportunity there to inflate the value of assets sitting on a balance sheet as to whether or not they can be—as to meet that threshold. I’m concerned about how the value of those assets is going to be audited and policed by Inland Revenue. If I could have an answer around the ancillary activities and these intangible assets, they have two areas where I think there’s wriggle room in the legislation and I would be concerned about that.

Now, “(c)” is kind of interesting—new section FE 7C(7)(c)—the things that an entity doesn’t have, so a qualified infrastructure group must not have these things. I’m just going to say that the reality is that it’s a logical impossibility to prove a negative. That’s just a basic finding from logic—one cannot prove a negative. How is a company going to be able to prove something that they don’t have? I mean, I can assert that I don’t have a cat, but proving I don’t have a cat is a different thing. I would like some clarity as to how that is going to be policed, as well. That’s three items there that I need some clarity from officials on.

Then new section FE 7C(8)—and this is the qualifying infrastructure. It has to be “a tangible asset in New Zealand that provides … transport infrastructure”—tick, I’m happy with that. “Provides energy infrastructure … electricity generation, transmission, and distribution assets”—provided it’s green electricity, that’d be a tick from us. “Water infrastructure”—this got me a bit worried, overseas companies owning water infrastructure and investing in water infrastructure. There’s a few issues around that in New Zealand at the moment and that kind of begs the question as to who ought to own our water infrastructure. I’d like to know what the policy discussions were behind enabling water infrastructure to be owned, built, maintained, operated by overseas investors. Overseas investors expect a return, and I feel as though water infrastructure—this is a conversation we need to have in this country—is infrastructure that needs to be operated by and for the benefit of New Zealanders, not by and for the benefit of overseas investors. “Telecommunications infrastructure”—OK, no worries about that one. “Waste infrastructure”—it’s got me a wee bit worried, but not as worried as the water infrastructure.

Then the last one: “social infrastructure … hospitals, schools, libraries, prisons, large-scale student accommodation or similar public facilities”—the large-scale student accommodation: all right, that seems OK. But hospitals? Schools? Libraries? Prisons?

You just said that.

Repetition.

This is actually a serious policy issue. This opens the door to private investment in our prisons. This opens the door to private investment in our schools. This opens the door to private investment in hospitals. This opens the door to private investment in libraries. This is a very serious policy question and I think we need to spend some time in this committee examining it, especially as this Amendment Paper was only dropped this week. There is a very serious policy issue here and that is the extent to which there should be private investment in these entities.

When we imprison someone, we take away—Madam Chair?

Madam Chair!

The Hon Dr Deborah Russell.

This is a serious question. When we imprison someone, we take away their freedom. That is a large and important thing for a State to do, but this says that people can derive a profit from the State imprisoning someone. That is deeply worrying. Our public schools have always been that: public schools and they have been provided by the State. As much as possible they have provided a free education. But if we are going to have private investment in our public schools, then that private investment is going to demand a return. That private investment for operating and maintaining those school buildings takes money out of taxpayers’ money and sends it off to private investors overseas. Is this the right thing for us to be doing as a country?

I want members on the other side to justify this. Why should we be enabling foreign investment in our prisons? This is a deeply serious matter and I want a policy answer from the Minister in the chair, the Hon Matt Doocey.

10:09

Madam Chair, I was just going to compliment the Hon Deborah Russell for being so strong, but starting to falter a bit—although Reuben Davidson did start off strong but faded a wee bit.

Just answer the questions please, Minister.

But I see the Hon Duncan Webb’s come in and passed him a few questions, so no doubt he’ll be back up on his feet now he’s been prepped a bit better.

The question around thin cap proposal—how will the value given to intangible assets be audited, policed by IRD? I’ve been advised the definition of “intangible assets” and “goodwill” follows standard accounting treatment, so IRD would check that this standard accounting treatment is being followed.

The question from the Hon Deborah Russell: what is new section FE 7C(4), inserted by clause 69C on Amendment Paper 559—if I’m correct in that—and that classification doing? Subsection (4), effectively, denies a deduction by deeming that income for debt that is not third party—from related parties—does not qualify, and the interest expense on this related party debt is deemed to be income. I’ll just read that again: subsection (4), effectively, denies a deduction by deeming income for debt that is not third-party debt. Debt from related parties does not qualify and the interest expense on this related party debt is deemed to be income.

10:10

I move, That debate on this question now close.

The question is that the Minister’s amendments to Part 2 set out on Amendment Papers 559 and 560 be agreed to.

10:12

There are a number of minor changes in this part of the bill to the GST rules, but, actually, the thing that I really want us to focus on is the new joint venture rules. I don’t want to go through all the remedials—fascinating that each of them is on an individual basis, but I actually do want to focus on the joint venture rules.

For the benefit of the committee, in terms of joint ventures, what was going on was where companies were involved in a joint venture together, so one company would be paying—sorry, two taxpayers, GST-registered taxpayers were engaging in a joint venture together, one entity would pay the bills and claim the GST and flow it through to the other company, who could claim their share of it, and so on. This whole process had seemed to go on in a fairly, I wouldn’t say casual, but on a somewhat ad hoc basis. It was the accepted practice for how GST on joint ventures was accounted for.

There was a need to actually firm up the legislation on this. The practice followed commercial reality, but Inland Revenue established that, actually, through a draft ruling, this probably wasn’t the appropriate practice; it didn’t actually follow the legislation. Although people were doing something, which, at the end of the day, accounted for all the GST correctly, all the correct amount of GST was being paid—that’s our understanding—it wasn’t actually being done legally. So there was a need to make sure that the GST rules caught up with the actual practice, given that the actual practice was reflecting commercial reality and did actually mean that all the correct GST was being paid.

My understanding is this whole set of rules ensures that unincorporated bodies can indeed claim the GST. It proposes what is now called a flow-through treatment. We’re familiar with flow-through treatment in other areas of the taxing Acts, for example, with flow-through companies and so on. This is a flow-through treatment here with GST.

The difficulty is that we got a whole lot of feedback from submitters and from accounting bodies, from some of our senior tax consultants that, actually, the rules now create more of a mess than there was in the first place. I just wonder if the Minister has a sense of how he would respond to that and what he would say to that, or what officials would say to that.

I appreciate that this is a difficult bit of law, so I’ll just go through it clause by clause. I was inviting the Minister in the chair, the Hon Matt Doocey, to perhaps comment on the general policy overall, but that’s fine. I want to know why—going to clause 108 which should be in section 2 amended, the interpretation section of the Goods and Services Tax Act—“partnerships” are not included? You know, partnerships are the ultimate flow-through entity of anything. So it’ll be interesting to know why partnerships are not included in these definitions.

Then it goes on in clause 108(6) to talk about some interesting things like—it’s a really interesting thing here—a “non-integral deduction”, means for goods and services that don’t make a substantial improvement to the main goods or does not become an integral part of the main goods. The “main goods” is an interesting definition in itself, but then a “non-integral deduction”, again, is there a definition of “integral deduction” sitting in the Act? In that case, wouldn’t that be a better thing to do? I want to know why it was defined this way on a negative basis as a “non-integral deduction” instead of being defined in a positive manner as an “integral deduction”. If the Minister could give me some clarity on that, please. Apparently not—not yet.

Carrying on through these rules, and they are quite technical. If the Minister could explain—sorry, I’ve just lost my place here because the Goods and Services Tax Act is a little bit complicated; it’s one of those ones that could do with a good tidy up. We’ve got a definition here under clause 109, section 2A amended, the definition of “associated persons” and we’ve got (db) “an ordinary joint venture and a member of the ordinary joint venture” is coming in, and we’re inserting (dc) “2 members of an ordinary joint venture or of a flow-through joint venture when they transact in their capacity as members of the joint venture:”. They now become associated persons. I just wonder how that affects the associated persons in these flow-through rules for the new joint venture rules.

Normally, when we’re looking at associated persons, we’re trying to prevent some mischief. But this seems to be enabling people to conduct something together. That just feels like a faintly different use of the associated person rules around GST.

10:18

Thank you, Madam Chair. I just wanted to look at one of the clauses in here in—I’m here on page 71 and it’s really a threshold question around a determinant. In clause 111(4), “After subsection 5(23B), insert: (23C)”, it steps through a number of scenarios here or criteria here for “a taxable supply of goods and services in a return provided by the supplier;” Then when it gets down here to (23E) it goes on to say that “Subsection (23F) applies if—” and, in (a), it says, “section 11(1)(md) is treated as applying to a taxable supply of goods and services in a return provided by the supplier: and (b) after the date on which the supply is made, the supplier or the Commissioner finds that section 11(1)(md) does not apply:” Then it says, “(c) the recipient of the goods and services did not provide the supplier with correct or sufficient information under section 78FB to enable the supplier to determine whether the supply should be zero-rated.”

There must be criteria or a threshold here, around what that level of sufficient information is or means. Then, if the onus is on the supplier to determine whether the supplier should be zero-rated or not, there’s someone here who has to interpret the criteria or information. To me, there’s two questions there: what metrics or framework would the recipient need to provide, but also what would the supplier need to provide? I’m keen to get an understanding from the Minister around the level of detail that is provided to both parties in that relationship, to enable the correct determinant around the applicability or otherwise of the GST considerations within this part—this amendment—to this bill. If there is a grey area or if that’s not crystal clear for people, the risk is that mistakes and errors will be made. Obviously, that’s exactly what this bill is trying to prevent.

10:21

Thank you very much, Madam Chair. I’ll just gather a few questions up around partnerships. We had one specifically on clause 108: why are partnerships not included? I’ve been advised this is to clarify for the avoidance of doubt that the rules can only apply to joint ventures, because, in some countries, joint ventures can include partnerships.

There was a further question around definition and also complexity, especially within the amendments. I’ve been advised the rules were subject to full public consultation; much of the volume and complexity of the amendments is in relation to zero-rating amendments, which were supported by submitters.

10:22

I want to refer to clause 114, which amends the zero rating of goods. The way the GST is set up is interesting: if exempt supplies, exempt goods, are completely outside the GST net, therefore you can’t claim input costs, but zero-rated supplies are in the GST net, and you can claim input costs against them. When you zero-rate something it’s to do with, in some cases, just ensuring that we’re not adding unnecessary complexity to transactions, and so on. Section 11 has a whole lot of goods that are zero-rated—a whole lot of things that are zero-rated. It’s adding into this section the zero-rating of the supply of goods and services through this joint venture.

That does make sense, but I want to just clarify with the Minister that we shouldn’t be passing goods back and forth in a joint venture and charging GST on them and so on. The zero rating here just enables that to happen efficiently, but nevertheless enables people to claim the input tax deductions—so if I could have a clarification from the Minister on that.

I do want to just clarify, in clause 119: often, people make mistakes with recording the information for GST and it actually matters kind of a bit more than it does in some ways for the income tax because of the way that GST is a flow-through tax and flows and flows and cascades through the system. We need to have correct record-keeping all the way through. In the supply correction information—that’s section 19N of the Goods and Services Tax Act—that date there is seven years from the date the supply was made. I just want to clarify that that is consistent with the other time frames in the GST Act; so that seven years works both ways. Again, it’s just that consistency thing. We know that if people have the same date in their mind, then it’s easier for them to comply with the tax law—so just clarification that the time frame is actually consistent within the GST Act.

I want to go to new clause 120; it’s the calculation of tax payable. You know, we have a flow-through joint venture; it’s making both exempt tax supplies, so no GST involved whatsoever, and zero-rated GST supplies, so GST is involved and people can claim input tax deductions. But what we have here is two entities involved in a joint venture together claiming input tax deductions. They have to agree on the same method for all members; they have to have that agreed in writing between all members, and it has to be fair and reasonable as to the method they’re going to use for apportionment. Minister, I just want to know: what happens if they don’t agree? What is the consequence if they don’t agree to that?

10:25

Thank you very much, Madam Chair. Just in response to the Hon Dr Deborah Russell’s question around non-integral deductions, and is there a definition of integral deductions: the advice I’ve received is because the relevant rules allow a GST-registered person to claim non-integral deductions for the relevant goods—typically, expenses for repairs or maintenance associated with a house that they partly use for home office or for their business—it is simpler, from a drafting perspective, to define what is not integral than to define what is integral.

10:26

I move, That debate on this question now close.

The question is that the Minister’s amendments to Part 3 set out on Amendment Paper 559 be agreed to.

10:27

We’re gradually making our way through this bill. There are, I think, three major topics I wish to discuss; they’re kind of related. The three topics that are really worth discussing in here: first is the repeal of section 17GB of the Tax Administration Act. The second one, which is a very serious one, is the insertion of new section 18HB, “Regular disclosure to Government agencies”. I think we need to have a substantial discussion around those disclosure rules, and I can see that my colleague Vanushi Walters is itching to get to discuss that. The third—and I must just check exactly where it is—is the rules about what information a commissioner may collect from trusts has been repealed and changed. I do want to have a look at that, as well. Also sitting in here is the Schedule 7 amended—I think sits in this part of the bill as well; that’s clause 169.

I want to go back, straight away, to clause 141 of this bill. Clause 141 is very straight but it repeals section 17GB, and there are a number of other sections that are amended because of that: 17C, 17E. Section 17GB is a really interesting provision and, I think, a really necessary provision. It is the provision that enables the Commissioner of Inland Revenue to collect information from taxpayers and to require taxpayers to provide information to the commissioner for the purposes of forming tax policy. Forming tax policies is a really important role; tax policy is complicated. We have a very specialist team at Inland Revenue who work in tax policy, and people who make lifetime careers there, as I can see from some of the officials on the bench at the moment who make lifetime careers in tax policy.

I don’t think we should bring the officials into the debate.

Oh, I was wishing to compliment them, but I will withdraw that comment, then, and I’ll make it in private later on. It is difficult to get tax policy right. Now, Inland Revenue, at the moment, has an excellent consultation process, which they work through to get tax policy right, but, even so, sometimes the information is simply not there.

Section 17GB gave the commissioner power to collect information from individual taxpayers or groups of taxpayers in order to see what was going on in the tax system, in order to see what patterns of behaviour there were, in order to see whether there was any mischief going on, and in order to see what could be done better. The information could not be used for tax collection purposes; it was completely barred from being used for tax collection purposes. It could not be handed over to investigative teams, or anything horrid like that. It had to stay sitting in that tax policy purpose. There was no harm being done by this particular piece of legislation, but this Government has decided to repeal that piece of legislation.

In the select committee process, really important groups of people—such as, I think, Chartered Accountants Australia and New Zealand; I’m trying to remember the others, but certainly the tax justice group—urged that this clause be retained. Given that people wanted the clause retained, given that they saw value in it, given that they felt it made tax policy a lot better, why, then, is the Minister continuing with this repeal of 17GB, with repealing this really important plank in the way that we form policy? It’s, I think, a real shame that it is being repealed, and I’d like the Minister to justify it.

10:31

Thank you, Madam Chair. I look forward to having a really robust discussion about clause 143, inserting new section 18HB, which is the insertion of the new disclosure requirements, and, in my view, a significant step into privacy rights. I think it really does require a broad discussion.

There was an interesting point of view, which I agree with, put forward by the Privacy Foundation, where they make quite a compelling argument that there is no need for a new scheme of disclosure. There is already the ability for information-sharing agreements to be created under Part 7 of the Privacy Act. The objection to using the current framework is primarily that it takes too long, so that it takes up to 18 months to get one of these agreements in place, and that it’s inefficient in terms of the purpose required for information sharing, particularly in regards to cases of fraud, etc. But the argument that the Privacy Foundation makes is that, actually, the existing regime—so the Part 7 regime—is sufficient. The delays that occur are not inherent or a necessary part of the system; it’s, essentially, due to operational reasons, but they also argue that the existing framework is sufficient and there’s no need for any of these changes. So they’re arguing “Just remove new section 18HB in its entirety—there’s no need because you could make operational efficiencies to make the current system work, and then you would also have the existing benefits of the system that we have.”

I do want to talk through the benefits that the current system has, because this is a clear choice that the Government has made not to try and address operational inefficiencies and use the benefits of the current system and bypass those protections which are important protections in privacy law. The first protection, they suggest, is that the current system is a legislative instrument, and while it does take some extra time, it does help guarantee high-quality drafting, high-quality information, so the information that’s required is confirmed by Order in Council. This would permit an agreement that sits outside of that framework where there’s an agreement between two agencies. The value of having that agreed by Order in Council is, of course, that the House then has the ability to disallow the agreement if it believes that it’s in breach of the privacy principles. Again, that means that the approved information-sharing agreements—the AISAs—must be approved by Cabinet, as well. The time taken to do that is important because it does mean that there’s sufficient protection for individuals.

The second thing is that they say that consultation—and they’re right—needs to occur under the existing information-sharing agreements. Under Part 7, you have to consult with agencies or people who may be affected, before you put that in place. Again, it does take a particular amount of time, but the argument is that that’s certainly worth it, because then you ensure that you’re protecting information and that the interests of those who may question the validity of a stretch into that information space can be taken account of.

The member does a very good job of interpreting the legislation, but I’m waiting for a question.

The ultimate question here is: why is there a need for new section 18HB, inserted by clause 143, at all? Essentially, we still have these information-sharing agreement provisions under Part 7 of the privacy regime—so that’s there. The argument from the Privacy Foundation is that that’s sufficient. What I’m setting out is why that is a better system. If the Government just chose to improve that system, as opposed to imposing this new one, they would not only be able to get the information required but individuals would still retain privacy.

The other important point they make is that when information is matched or shared, the individual concerned would be alerted under the existing framework; that’s not the case under the new framework. Their point there is that there can be errors that are made.

So the first question to the Minister is: why not retain the current regime and just address the operational issues that the Privacy Foundation have pointed to?

10:36

Thank you, Madam Chair. I’ll just answer the question from the Hon Dr Deborah Russell. This was a question around “Why repeal section 17GB?”. We acknowledge submissions on this, and we acknowledge people’s feedback, but, ultimately, the Government had concerns that section 17GB gave insufficient weight to the privacy of taxpayers—and it actually links into the point from Vanushi Walters. Because of that, we thought a repeal was considered to be the best option for protecting the privacy interests of taxpayers. Just for some context, that section 17GB had only been used once before previously.

10:37

As I said, I think it’s a real shame that section 17GB hasn’t been retained. A number of submitters came to us and said, “Well, OK, we get that there were concerns around the use of 17GB, but then why not simply put more safeguards around it? Why not put more guardrails around it?” So why not put explicit provisions into the law as to how it could be used? I do kind of agree that more guardrails could have been introduced in the first place, but why remove such a valuable tool from our policy officials? It would have been straightforward to put more guardrails around it.

We’ve had pretty interesting discussions in the Finance and Expenditure Committee. This is available from the public hearing we had with the Commissioner of Inland Revenue earlier this year on the annual review. He talked about the way that taxpayers’ data is protected. He pointed out that there are really stringent provisions around that. They’ve dismissed people for breaching those provisions. I think, in the last five years, something like 75 people have been dismissed because they breached the provisions of information access, so they take really good care with their staff—take them through all sorts of training programme things around the privacy of taxpayers’ information. I’m concerned that one way to use section 17GB simply would have been to shore up the protections around it.

In discussing this, again, in public session, the assertion was made around section 17GB that the commissioner actually had the power to collect this sort of information under section 17GB already; that he could already do so because he could use his powers around the stewardship of the tax system to collect the same information. Now, that seems like a long reach to me, and I would like to understand whether the commissioner can actually collect that information, and to what extent taxpayers would simply refuse to give it up, and what the commissioner would do in those circumstances.

So, you know, we have a situation where we had a valuable tax policy tool. It could have done with more guardrails. A way of retaining that valuable tax policy tool would have been to have put more guardrails into it, and yet the Minister chose not to do so. Why not, Minister?

10:40

I think it is a finely balanced argument, and we understand all the arguments. But I think what has tipped it in favour of the repeal of section 17GB is a couple of things. One is that the nature of that provision, in our view, was overly invasive, to the point where it didn’t adequately protect the privacy rights of taxpayers. The second point would be that it generally wasn’t used often; in fact, it’s only been used once. In terms of a tool, it has been used relatively rarely. With those two factors, we think it’s finely balanced, but we’re taking the decision to repeal it.

Just in terms of the idea around more guardrails, I tend to agree that guardrails for privacy are important, and, in fact, the member pointed out some of the guardrails that currently exist around repercussions for misuse of information data that exist in the system. We think it’s probably a good argument, but we think it’s in the right place.

I’ll take a call from Vanushi Walters, but I am going to comment that we are getting more speeches than questions at the moment—from a range of members, actually—so I want this to be concise and clear and I want it to be post - clause 143, which we’ve just discussed, because, as we made a ruling last night, we’re moving forward, and the teams need to be organised and working in that structure.

10:42

Thank you, Madam Chair. I will be brief. My first question was: why do we need it at all, when the existing framework is protective? The second option for the Government was to adopt some of those protective elements of the current scheme into the new one. So, specifically, I would ask the Minister in the chair, the Hon James Meager, why there is no inclusion of a requirement to give notice of an adverse action. In the current framework, for example, in cases where there could be an offence committed and so you might want to information share, the result is maybe a deportation. The current framework allows for the individual to be notified; there’s notification requirements of a potential adverse action. The new framework doesn’t appear to have that, so if the Minister could advise whether there was consideration for inclusion of some of those protective elements.

The second one is on the reporting requirements. The situation as it is allows the Privacy Commissioner to raise concerns with the Minister of Police or the Minister of Revenue, but doesn’t allow the commissioner to require an agreement to be reviewed. Was there consideration, or would the Minister consider, that that is a useful clause to include?

10:43

Thank you, Madam Chair. I’ll just go and address the question from Vanushi Walters about why new section 18HB, inserted by clause 143, is inserted. Essentially, the member pointed out that these kinds of provisions do already exist, in a sense, through the approved information-sharing agreements. The problem with those is that they can take some time to process through. They are helpful for a situation where it’s unclear whether there is public support for a particular information-sharing agreement to be put in place, and so that public consultation is required and helpful.

When there is a situation where it’s clear that there is public benefit or public support for information sharing, that’s where this new section 18HB can come into play for a proposal for ministerial information disclosure. It’s a faster tool; it’s used in an instance where there is clear public support for the information-sharing purpose, and also where time is of the essence—for example, it could be relating to a person’s ability to access a benefit or to combat serious offences.

10:44

A couple of comments and then on to a new section. The Minister in the chair, the Hon James Meager, said that the information-gathering power in section 17GB, repealed by clause 141, had only been used once, which proved it wasn’t really needed. For goodness’ sake, it’s only been in place since 2021, so it’s a very new power, so I’m not surprised it hasn’t been used more often. That doesn’t say that it couldn’t still be used. The Minister also said that it was important to protect the privacy rights of taxpayers. Well, how does that stack up, then, with the huge impost that has been introduced in clause 143, where there is now going to be a whole lot of information disclosed to other agencies and without, necessarily, the strong protections we know Inland Revenue has got in place? Those things really do push against each other, Minister, and I’m really disappointed to hear you advancing those arguments.

Questions, not statements.

Take a call. I’ll leave my colleague Vanushi Walters with clause 143 and those very important issues around privacy. I want to move to clause 153, and that’s the repeal of the legislative provisions for trust disclosure. Now, again, there was a whole set of provisions. We know that trusts are a very commonly used mechanism in this country. We don’t have a lot of information about trusts. Particularly if they don’t earn income, then they don’t have to do a tax return, so it’s very hard to know what’s going on with trusts. They are routinely used for tax-planning purposes, with “planning” being an interesting word there.

The commissioner was enabled to collect a whole lot more information around trusts—you know, names of trustees, names of set laws, and so on, to try to trace some of the flows around that. This is clause 153, Madam Chair, which repeals section 59BAB.

Yes, I’m on it.

Then it was asserted that the commissioner would still be able to collect that information under his existing powers. Could the Minister in the chair please explain those existing powers to reassure that that information can still be collected.

10:47

Thank you, Madam Chair. I want to get to some very specific questions in clause 143, section 18HB, the newly drafted section inserted in here. The first is in subsection 3(a)(i): “the disclosure is reasonable and”—and, here, the word “practical” has been replaced with “practicable”; no major issue with that. So no major concern, because that doesn’t really, in effect, make much difference to the impact of that word.

The questions I have, where I think the wording has been redrafted and that does have a material impact on the intention of the clause, is subsection 3(a)(iv), where we’re seeing “adequate” struck out and replaced with the word “reasonable”. Now, there’s quite a difference between these two words, in my opinion, and I’m interested in getting the Minister in the chair’s opinion on this.

“Adequate”—for example, if I have a bucket and I’m trying to move water from one place to another, and the bucket has a hole in it, it’s not adequate for the job but it will still do a reasonable job of transferring water from one place to another. But it’s not actually adequate. So replacing the word “adequate” with “reasonable” would, all of a sudden, imply, having not as strong a safeguard in place to protect the privacy of individuals and the commercial confidentiality of information, that this bill is now prepared to accept a bucket with a hole in it to do that job rather than a robust system that will be watertight. When it comes to the privacy of individuals and the commercial confidentiality of information, I would want a bucket that didn’t have a hole in it to be managing that information.

Further down in this passage, the word “retention” has been changed to the word “storage”. The word “storage”, to me, talks about a method of containing information. It doesn’t give any implication of timeliness; “retention” does. So the issue here, and particularly in the digital age—and we are well and truly there—is that storage also speaks to digital technology and the potential for digital technology to be used as the method for holding that information. But, again, storage doesn’t explicitly state or imply, as retention does, or did, or would have, a time signature or time frame on that. I’m interested in the Minister’s answers to those questions, not so much about “practical” to “practicable”, because I think that is a minor change, but “adequate” to “reasonable”—I see that as being significant.

If someone told me they were going to provide me with adequate protection, I’d be quite comfortable; if they said “reasonable”, I’d want to be asking some questions about what their idea of reasonable is versus what my idea of reasonable is. Similarly, “retention” to “storage”, all of a sudden; a time frame on that isn’t necessarily implied by the use of the word “storage” versus the use of the word “retention”. Some answers to those specific questions would be appreciated.

10:50

Thank you, Madam Chair. I’ve got a couple of answers that are just overdue. One, I think, was just to round off a question from Vanushi Walters. I think there was a question around why there is no inclusion to give notice of an adverse action in the new information-sharing proposal framework. The adverse action will be included in the ministerial agreement, rather than the framework itself—for example, one of those adverse actions could include reductions in some entitlements.

On the question from Dr Deborah Russell about trusts’ disclosure powers; the existing trust powers are in sections 33 and 35 of the Tax Administration Act, which enable the commissioner to prescribe and to require taxpayers to file returns as required by the commissioner. I’d just make a comment that I know that the member mentioned that the provisions have been in place since 2021, and that’s not a lot of time, but, of course, that’s five years. I measure time in terms of Tom Rutherford, and that’s about 20 percent of Tom Rutherford’s life. For some people, that is quite an extensive period of time with which you can undertake some action.

Finally, I’ll give some consideration to the difference between storage and retention. From a pure statutory interpretation view of the difference between “adequate” and “reasonable”, there is a longstanding understanding of reasonableness tests in legislation. They provide for an objective test for what is reasonable in particular circumstances, and that actually takes out that subjectivity of what I think is reasonable versus what you think is reasonable. It’s an objective test, and there is an argument in there that when you require an adequacy test, you could go to the extent of requiring actions to be taken that are unreasonable in the circumstances.

In order for something to be bulletproof, or in order for all of the holes in the bucket to be completely filled and completely sealed, you could block those holes up with plasticine, I guess; you could get your welder out, and you could weld the bottoms of the metal pail together; or you could replace the bucket with an industrial-strength nuclear bunker. That might be adequate to protect something, but it might not be reasonable to do so. That’s, I think, the main difference there. It provides protection for the consumer and protection for the data because you still have to take reasonable safeguards, at which point the adequacy of those will be a consideration in what is reasonable. One person’s interpretation of adequate may be that nuclear bunker, and someone else’s interpretation might be just getting a new bucket that’s fit for purpose.

10:53

Thank you, Madam Chair. And thank you to the Minister in the chair, the Hon James Meager, for his explanation in terms of adverse actions being included, but in the agreement itself. I would say that there are still rights issues present because you’ve reduced that from a statutory obligation through to secondary legislation. We can’t guarantee that it’s there.

My other point to the Minister was that there are other protections in the current framework. There is a question across the board in terms of reporting and advising the individual before the information is shared. There are a number of protections in the current system, and there’s been a choice made not to have them in primary legislation. It could be the fact that they’re in secondary legislation, but, none the less, the point is that they are potentially more rights-infringing because they’re in secondary legislation as opposed to primary. The reason this is important is because this could be biometric data as well. Clause 143, inserting new section 18HB, says “the Commissioner may disclose sensitive revenue information”, but revenue information presumably would include a file on an individual that contained biometric data as well. We’re talking about the potential sharing of biometric data; again, the existing framework allows additional protections.

My question is this: if there’s a decision being made to lower those protections to secondary legislation, surely—at least for biometric data, a particular category of private information—we may want to retain the higher protections that are in statute as opposed to secondary legislation, and would the Minister consider that as something that could potentially be lifted into primary legislation?

10:55

I think it’s an interesting discussion because there are obviously trade-offs when you incorporate something into statute versus secondary legislation. One of those is that the benefit of having something in statute provides rigidity and a little bit of untouchability, to a certain extent. The downside is that if that particular provision or condition of storage of biometric data is in primary legislation, there is no challenge to the rights-limiting factor of that beyond a declaration, say.

You could argue that having those kinds of provisions in secondary legislation opens up those guidelines or barriers to challenge under privacy conditions, human rights conditions, reasonableness tests—all under judicial review. There is an argument that, actually, if you’re concerned about the effectiveness of them and whether they are rights-enhancing enough, you have the ability to actually strike down secondary legislation in a way that you don’t for primary legislation. In one sense, you could argue that there are some stronger protections by putting it in secondary legislation, as well as having that flexibility. It’s probably there or thereabouts. We haven’t given consideration as to lifting biometric data into primary legislation at this point.

Just to round off the question from Mr Davidson, I am now advised also that the changes he refers to were actually those suggested by the Law Society at the Finance and Expenditure Committee. Their intention is to align with the wording in the equivalent sections in the Privacy Act and also in the Customs and Excise Act. Part of that will be just a consistency of terminology across statutes.

10:57

I move, That debate on this question now close.

The question is that the Minister’s amendments to Part 4 set out on Amendment Paper 559 be agreed to.

10:59

I know we don’t backtrack in these debates, but, just for completeness, right at the end of that last question, Vanushi Walters asked a question around biometric data being in secondary legislation. I can point to examples of that existing already. Biometric data can already be disclosed under approved information-sharing agreements, which are also secondary legislation, so there is precedent for that kind of data.

Part 5 is the “Amendments to other enactments and revocations” part. It is, essentially, the consequential amendments that give effect to the policy decisions agreed to by the committee at the previous parts. For example, it amends a number of statutes to make a series of administrative and technical changes to give effect to those previous agreed policies—for example, amendments to the KiwiSaver Act to insert a definition of “compulsory employer contribution”; amendments to the Unclaimed Money Act to, again, define what a “tax file number” is. I’ll think of some other interesting examples to take the committee to. We’ve got amendments to the Māori Fisheries Amendment Act to insert new parts around share transfers, and various other definitional inclusions, as well. It’s a fairly straightforward part that makes the effective changes to other pieces of legislation that are required to give effect to the bill.

11:00

The Minister in the chair, the Hon James Meager, is correct that in the bill that has come back from the Finance and Expenditure Committee, this is a fairly straightforward part. I want to draw the committee’s attention to one change, which I think is just kind of interesting in itself, but then I want to raise an issue that actually makes it not straightforward.

I just want to draw attention to clause 187B. It’s an amendment to the Māori Fisheries Amendment Act, and there are some matters in there to do with some shares being transferred from Te Ohu Kai Moana Trustee Ltd. That was an out-of-scope amendment to the bill. We had to go to the Business Committee to get permission to include it in the bill, and it was actually there in order to protect the position of the shareholders there. It was a really important one. We were pleased to be able to include it in the bill at the select committee stage.

The bit that is not straightforward, and perhaps the Minister has missed this, because it is not in the bill itself; it is on the Amendment Paper. Now, this Amendment Paper was dropped on Monday sometime, maybe Tuesday sometime. We knew it was coming. I came into the House on Tuesday and looked for the paper on the Table and then looked at the regulatory impact statement and the like on the Table and found a brand new one on student loans. That sits in this part of the bill. These new rules around student loans were not signalled earlier on. They were not signalled in the select committee process. The first we knew of them was when they arrived on the Table this week.

I see the Minister is looking a little disconcerted. I’m going to direct the Minister to Amendment Paper 559. In the original bill, we are looking at the amendments to the Student Loan Scheme Act 2011. That’s on page 93 of the original bill. In terms of the Amendment Paper—and I’m going to urge my colleagues to look at this Amendment Paper too, because this does a whole lot of work. There’s an Amendment Paper and a regulatory impact statement. In terms of the Amendment Paper, we are looking at the new clauses which are now being inserted. It is new clauses 180AB to 180AI. If we look in terms of page numbers, we are going from page 17 to page 20 of the Amendment Paper.

Sitting in here are a whole lot of new rules around student loans—not signalled in the bill that was presented to the House in the first reading, not signalled during the select committee process, not signalled at, I think, the second reading. The first we knew of them was when this Amendment Paper and the attached regulatory impact statement arrived on the Table earlier this week—a whole new set of policy, which we actually need to have a pretty thorough discussion of, because there are some quite serious issues sitting in here.

It’ll just take me a while to explain this, seeing as the Minister hasn’t. There’s a known problem with student loans. We have a number of student loan borrowers overseas who have very large loan balances, and because they are overseas borrowers, they also have very, very large amounts of interest on those loans. In fact, in many cases, the interest exceeds the amount of the loan itself, the original loan proper. That is now creating a number of problems. There’s a huge problem for the individual student loan borrower. We know of people who simply won’t come back to New Zealand, because they are overseas. We know of people who are deeply stressed by their student loan balances and can’t manage them.

It used to be that a student could head off overseas with their student loan balance and pretty much just remain uncontactable, but these days we have some pretty strong information sharing going across tax jurisdictions, actually going to the tax jurisdictions that New Zealanders are most likely to go to, obviously, with Australia and with the UK. So we are now starting to be able to track down these student loans.

The difficulty is, a little bit like with child support, a person—[Bell rung] If I may carry on, Mr Chair; I do want to explain the problem. The difficulty is that, as with child support, the amount of interest and penalties become so great that in itself it becomes a huge barrier to the person doing the right thing and contacting Inland Revenue and sorting out a repayment schedule.

What these set of new rules do is that they enable a person to get in contact with Inland Revenue and to put in place, hopefully, a payment programme by instalment—an instalment package. In that situation, the commissioner, if these rules go through, will have the capacity to forgive some or all of the interest—to write it off. Obviously, we can see straight away a whole set of issues that we need to work through in terms of that capacity of the commissioner to forgive interest debt, provided the person keeps in line with a student loan.

First of all—I want to get to a question now, and then we’ll go through it clause by clause. This is a question on the general policy. I’d like to ask the Minister to explain why Inland Revenue, why the Minister, thought that this was a good time to make this change. What is the reasoning behind making this change?

11:07

Thank you, Mr Chair. As someone who incurred a significant student loan and then stayed in New Zealand, worked my butt off, and paid it off, interest accruing on my loan hasn’t been an issue for me. But for many New Zealanders who choose to engage in our public education system and enjoy the fruits of that system and the support provided by the taxpayer through that system and then head abroad to pursue their dreams and ideas and careers—which is their right to do and something that we love to encourage, as a country that loves to encourage our young people to explore the world, build a career, and then, hopefully, return home—they do incur debt sometimes in terms of interest on their loans. That can be, as the member indicated, quite significant at times. For some of those individuals, that has resulted in debt so large that they disengage from the IR completely.

Currently, the position is that the Commissioner of Inland Revenue can only provide relief from late-payment interest on student loans. That is interest which applies when a borrower doesn’t make a payment in time. Under the existing laws, the commissioner does not have discretion to provide relief from interest charged on student loans more generally. You could have an instance where a borrower overseas has accumulated interest, has never made a late payment, but still has significant interest debt. Currently, in that situation—and that applies to overseas borrowers, clearly—the commissioner has no discretion to provide relief at all.

The proposed amendments in new clauses 180AB to 180AI on Amendment Paper 559 would give the commissioner the discretion to provide some relief from that interest. Discretion would be broad in nature, and it could be exercised when the commissioner considered relief was equitable. To qualify, the loan would have to be repaid in full, either in a lump sum or through short-term instalment repayment arrangements, and, after that point, both the loan interest and the late-payment interest would be cancelled for the period of the instalment arrangement, provided that the borrower met all their obligations under the arrangement.

So we are trying to find a way in which we can encourage overseas borrowers to pay off their loans more quickly. One of those ways would be to provide an incentive through relief from that interest debt, because we know that the accumulation of debt overseas is an issue, and, as the member pointed out, we have undertaken a number of tools and changes over many years to continue to pursue those who have incurred a debt from the taxpayer and who otherwise would be obliged to pay. But we cannot track them down or chase them up as readily as we can if they were onshore here in New Zealand. We do that more now with our relationships in the UK and Australia, but this is one way of incentivising those borrowers by saying, “Look, if you get on top of it, if you pay off your debt, we can provide you some relief from the interest that may have accrued on that debt.”

So that’s the intention behind it. We want to encourage people to reduce the debt they have overseas, and, ultimately, hopefully, in one sense, get them to a position where they do want to return home to New Zealand and build a life and build a family here because they won’t be faced with a very large tax bill when they get here.

11:11

I just have a further question on the broad policy level before we start getting into the detail of it, because there are really significant policy issues here. This is just one further question from me and my colleagues, and they have further broad policy questions.

There’s an obvious fairness issue here, and I’m sure the Minister in the chair, the Hon James Meager, is aware of it. At one stage, I was overseas paying a student loan, and I did the right thing, paid the amount and so on. There are other students who stay here in New Zealand, and I’m delighted my three daughters are doing that, and they get no interest on their student loans. But there’s a heap of young people who head off overseas, do their OE, have two or three or four great years overseas, maybe stay permanently, but in those two or three great years they acquire real knowledge and skills and expertise and then come back to New Zealand. Many of them do the right things. They’re in contact with Inland Revenue. They work out how much they’ve got to keep on repaying on their student loan. They keep on repaying their student loan, and because they are overseas borrowers, they pay interest as well. These are the people who do all the right things. They’ve paid their loan and they pay the interest, and now those people who’ve done the right thing—and I’m sure the Minister can see where this is going—are going to be faced with a group of people who have not done the right thing, who have not paid their loan, and so have been in contact with Inland Revenue. They’ve done all the wrong things. They’ve taken the money and run, and those people are now going to be let off not only their late-payment interest but now they’re going to be let off the interest as well. So they are going to end up paying less overall than the people who have done the right thing.

Now, I get the reasons for doing this. It’s something we were grappling with in Government and I know this Government is grappling with as well. It’s actually a hard problem. But I want the Minister to talk to those people who have done the right thing and have paid the interest, and could the Minister explain to those people why this is the right thing to do, why it is a good policy even though, certainly at first glance, it looks like quite an unfair policy? What’s the wider consideration that means it is best to pursue this despite the seeming unfairness to some individuals?

11:13

I could think of an analogy here at home. If you were someone who had committed an offence and that offence had come with, let’s say, a fine, and you’ve got two people, same offence, same fine, and one person chooses to pay the fine on time and incurs no further penalty, the second person chooses whether they have the means or not to pay the fine. Therefore, they incur some penalties on that and may at some point incur a conviction, at which point the court may decide, “Well, in lieu of your inability to pay the fine, we may wipe that debt and we may ask you to do community service instead.” That recognises that there are some situations where having some flexibility may result in a greater outcome because the individual who would be saddled with that debt or that fine may then be able to contribute in another way, and you reduce the overall long-time impost on the taxpayer.

I think the general proposition for those people who have done the right thing is that we will always, as a Government, support those people, and we will do everything we can to take both a carrot-and-stick approach. We’re a very fair-minded and evenly balanced Government and while we have the stick with which we can chase people down through the IRD, and say hello to them when they arrive at the border and remind them that they’ve got a debt to pay, and maybe send them friendly reminders through the post, we also will provide a bit of carrot for them as well. I think that is a very even-handed, balanced approach, and it’s a good way of making sure that people are aware of their obligations and do pay up. But we’re also aware that there is a responsibility on the Government to try and recoup as much of those costs as possible. If it means having more debt paid off in a more timely manner, we are willing to take steps to provide some incentives to do so.

For those who have borrowed money from the taxpayer and gone overseas, made a good life out of it, and benefited from the higher incomes and the higher quality of life and the opportunities that higher education and taxpayer-funded education gives them, I’m very proud if they choose to come back and contribute back to New Zealand. Because, certainly, there are people out there who don’t have the privilege or the opportunity to undertake further education and get the private benefits of that, and they are the ones that are out there working in our store houses and our freezing works and on our farms day in, day out, paying the tax so that some of our children can enjoy a higher education and travel the world.

So for those of you who do the right thing and pay your debt and come back, good for you. For those of you who have struggled a bit and have incurred some interest and are thinking of writing it off and never coming back, hopefully this gives you food for thought and an ability to maybe make that decision to pay off your loan and come back home at some point.

We’ve had some very good contextual discussion on the policy issues; now the nuts and bolts, please.

11:17

Thank you, Mr Chair, and thank you for that, Minister. I want to echo the previous speaker’s surprise when I saw the regulatory impact statement on this particular section, because, literally, the student loan interest rate and the concerns around that has been something that the Green Party has been advocating for quite a while, particularly ramping that up since the middle of last year. So I’m really pleased to see something that the Government is doing, and I also particularly acknowledge the Hon Dr Shane Reti on this as well.

You want to get into specifics, Mr Chair, but I just note that this is my first call. I have some very specific questions, and, I guess, the first question I have for the Minister in the chair, the Hon James Meager, is: when we are looking at the overseas student loan interest rate, one of the fundamental differences we have when it comes to interest rates in general is that, in other areas, the interest rate is determined based on the size of your income, the proportion of your income if you’re paying for a student loan back here in Aotearoa New Zealand. That is not the case when you are overseas borrower. When you have a student loan and you are overseas, your repayment is not based on your income but on the size of your loan. The problem with that, I think, is the misconception, the assumption—and I think the Minister just mentioned this, as well—that when you are going overseas, you are likely going to be in a position where you are earning more or having a better standard of living. That simply is not the case.

One of the things we hear when we’re talking to overseas borrowers around this is that when you’re in another country, in general, the cost of living is lower but also your salary is lower. If you’re in, let’s say, South-east Asia, you do not actually get a chance to even be able to earn enough to pay off your loan in the first place, which then means that you’re naturally going to accrue interest on that.

So my first question is: has the Minister, as part of this package, considered adjusting the interest rate to the income level of an overseas borrower rather than alongside an overseas borrower? That is what’s getting a lot of people in debt. Basically, back in 2021, we were looking at maybe about 52 percent of the people having overdue payments; now we are looking at 75 percent by 2025. So it is obviously clear that this system, in terms of how we are making repayments, is not necessarily working. But, again, what we are introducing here is a good step.

My second question is, when we are looking at this, as part of this package, what sort of allowances is the Minister also being presented, in terms of IRD’s ability to communicate with overseas borrowers, not just in terms of this policy but, in general, about overseas loan payments? The reason I also say that is because one of the other challenges we’re finding with overseas borrowers is, number one, the system is in place to fit the purpose of domestic borrowers without an interest loan, which means that when you are getting an email from IRD about your overseas payment, you are never actually told how much you’re paying.

What we’re hearing is—please, correct me if I’m wrong—you’re never actually told how much interest and how much principal you’re paying on top of that. Anyone with a mortgage will know that your fortnightly payment or weekly payment or monthly payment to the bank breaks everything down so you know how long it’s going to take you to repay that—that’s not immediately clear. Also, when IRD communicates with overseas borrowers, often there isn’t clear communication. There is an inability to check, in terms of emails, and also, sometimes, it kind of tells you that it’s a six-monthly payment and they drop it on you at the drop of a hat.

So when we’re looking at this, the other question I have is: what is IRD going to be doing to ensure that overseas borrowers are understanding the size of the loan they have that they need to repay? Because even including the example that we’re seeing here in the regulatory impact statement, paragraph 15—the example that we’re using here with “Lana”—often people who left quite early on didn’t necessarily know they had any more loan outstanding and that it has been slowly accumulating. So while the policy here we’re seeing, which is allowing the commissioner changes to the student loan, to get interest but also loan interest—is there a way that we are able to communicate with borrowers earlier on, so they don’t get into that situation in the first place?

11:22

I think this might be a case of “It’s not the size of the income; it’s how you use it.”, in terms of paying it back. So for those who are overseas, they are smart enough to have gone to university, are smart enough to have booked their flights and found accommodation and found work; I think they are more than capable enough of keeping track of their own loans. However, in saying that, if there is more work that the IRD could do to communicate with them, I’m sure that they would be interested in that. It is, unfortunately, outside the scope of this bill. This bill is focused on changes in order to allow for the provision for the commissioner to write off interest, in terms of providing relief.

So in terms of the member’s two questions, there has been no consideration to changing the interest rates, nor to changing Inland Revenue’s communication strategy as part of this package.

Thank you, Mr Chair. I want to take the Minister in the chair, the Hon James Meager, to page 19 of Amendment Paper 559—to his new powers introduced at clause 180AF. This is the provision which allows for the relief of loan interest. My first question to him is: if this power was being exercised by IR before this new provision was introduced, how, and was that power outside of their legislative power? Was that by some other regulatory-making power?

I refer him to a report on this recently—as recently as May 2025—where Auckland tax expert Dave Ananth profiled a number of cases of overseas borrowers that he had been assisting with, some of them with six-figure loans that had racked up due to the interest costs, over and above their initial costs, that these New Zealanders owed. He was able to negotiate with IR one-off relief for those students and those were detailed by the reporters who covered those cases. So there are cases, recently, where IR have forgiven debt of overseas borrowers. If this new power is required, then under what power was IR operating when they granted that relief? That is my question to him.

I want to ask this in the context of at the time of that reporting in 2025, the Minister Simon Watts had ruled relief out. He was reported as saying that there would be no forgiveness of that debt for overseas borrowers and he framed this all as a discussion about the moral hazard of New Zealanders overseas and the fairness constraints around that; people should repay the debt that they owe. They knew the rules when they got into it. You can understand that position from the Government. That’s not something that we would be pushing—this sort of “tough on borrowers” rhetoric—but that was the position of the Minister. So I think this committee is owed a little bit of explanation about why we now have a Minister in the chair who has said, “There’s a stick there, but we need to use this carrot.” That is a change in the position.

Why is it that when we have a Minister talking up the new powers of enforcement for IR that this bill has actually introduced—more powers of enforcement, and we have traversed them in this stage, and, in the last year, new enforcement powers for IR. Labour members have pointed out that a punitive system and a further punitive system would discourage those skilled New Zealanders from being able to return. It’s, essentially, an argument about labour mobility overseas.

Is it the Government’s position now that labour mobility and a new sort of workforce where we have New Zealanders going overseas to work in Queensland on the building sites there and build their houses—is that now Government policy to encourage New Zealanders overseas, and is this part of that? Is it the Government’s policy that New Zealanders will always go on an OE—as, I think, has been answered in question time in response to the number of New Zealanders leaving overseas by the droves? Is it now the Government’s policy that that sort of labour mobility requires some form of flexibility in these rules, which were ruled out by the Minister in charge of this last year? When we look at those powers of relief that the commissioner can grant in new clause 145A, it also begs the question of when the Minister used the example of a re-payer who has repaid every payment on time, has never missed a payment, but is still accruing interest debt—is that the only example here? That would also fit with the Government’s rhetoric around being tough on enforcement, but that’s not what I’ve heard from this Minister.

I’ve heard that this is about equitable considerations, as well as natural justice, for those people who are seeking genuine relief, recognising that people find themselves in different circumstances. So is it, in fact, the case that the example used here is much broader than it; that someone who has missed a few payments—the 70 percent of borrowers overseas who have missed some repayments, who have done things a little bit wrong—does it also apply to them?

Then, how much of the debt? There’s $4.3 billion outstanding that is held by overseas borrowers, yet they make up only less than 20 percent of the total borrowers. How many of them, who are not coming to this entirely blameless, but they are people who we all recognise: they’re probably members of our family, people we have employed before, people who we know and we’ll see, hopefully, around the Christmas table because they will be able to return to New Zealand; these people who have gotten themselves into a bit of a situation—does it also apply to them? We’re still not clear whether IR, in fact, had the power to forgive their debts before, has been doing this by some other mechanism, and will continue to, in the future, with these new powers, which seem much more than the Minister intended when he commented in 2025.

11:28 · to the very last point

I understand that the case the member’s referring to was using the existing provisions, which I outlined before, which is that the commissioner can provide relief for interest accrued as a result of late payments. The challenge at the moment is that that is the only thing that the commissioner can provide relief for, not the wider interest burden.

I’ll also remind the member that the commissioner will be able to consider, and, in fact, will consider every case on its individual circumstances. So if you took into account some of the examples that the member said, where the borrower was not completely blameless when it comes to not making their repayments—perhaps one or two many trips to the South of France in their holiday period, when they could have been paying off the loan generously provided to them by hard-working New Zealand taxpayers—I’m sure the commissioner will consider every circumstance relevant to the borrower to determine if they are, indeed, eligible for relief. Relief is not guaranteed and the amount of relief given will be able to vary.

I’ll note that the IRD did receive Budget funding in 2024 for additional compliance action, and one focus area was on overseas borrowers. I will note that those very large sticks do apply to borrowers, in terms of the enforcement action that IR can take, but, you know, we are a Government that supports our farming sector—we are the world’s farm—and we are always being pro-carrot, and so we will always have a mix of carrot and stick. If this is something that can encourage some higher levels of repayment so that the taxpayer isn’t continuing to incur this debt on behalf of those individuals, then we think that is something worth pursuing.

My message to all borrowers out there, whether you have stayed onshore or not, is that you are very fortunate to be in the position to be able to go on an OE. I didn’t go on an OE. My parents didn’t go on an OE. Their parents didn’t go on an OE. If you go far enough back, my great-great-great-great-grandparents did go on an OE, but they came on their OE either from Hawaiki or from Cornwall to come here and to make a life for themselves. So for those of you who are privileged to go on an OE: enjoy yourself, make a living, but maintain your obligations and pay your debt back, like the rest of us have to.

Dr Lawrence Xu-Nan. Again, we’re getting broad on the policy issue here—on both sides of this discussion, I might say.

11:30

Thank you, Mr Chair. I do now want to move on to specific clauses, but, I think, just one small thing on that—and I thank you, Mr Chair, for indulging me to be able to ask my previous questions.

One point of clarification I do want to make is, what I’m asking for, maybe, as a part of this package, is to treat the method in which overseas borrowers are paying off their student loan the same as domestic borrowers, where the repayment is based on their income, not based on the size of their loan. Is that something that has been considered? Because that would drastically reduce the number of overseas borrowers, particularly in countries where they may not earn the same income but have a lower cost of living. It will mean that they are less likely to get into debt in the first place and be more prompt in their repayment. So I’m just checking that with the Minister in the chair, the Hon James Meager.

Moving on to new section 138A, inserted by Amendment Paper 559. I want to start with the new section 138A, which is “the borrower has entered into an instalment arrangement”, and this is with the commissioner. I wanted to check because in the explanatory note, it does say, “either in a lump sum payment or through a short-term instalment arrangement”. If it’s in lump sum—so, basically, the whole essence of this is that we’re looking at waiving the interest, in terms of both the debt and, also, for the loan itself.

I guess, going back, the first question is: in new section 138A(2), it says, “from the date of the instalment arrangement”. If you’re paying off in a lump sum and there’s no retrospective element in terms of the debt accrued by interest or via debt interest, wouldn’t that mean that they just need to pay off the whole total lump sum—as in, the entire amount—and there’s actually no relief? Unless I’m missing a trick somewhere, where the commissioner is able to retrospectively say, “OK, I see that you have accrued interest both in terms of your loan but, also, in terms of your debt from, let’s say, 2015 to 2025. If you’re paying off in a lump sum, we are happy to waive the loan interest and the debt interest from 2020 to 2025.” That, I can see as being an incentive. But if you’re saying, “from the date of the instalment”, and that date is when you’re paying off in a lump sum, there’s no retrospectivity, which means there’s no relief whatsoever. Is that a correct assessment?

Going back, my second question is, if the borrower has entered into an instalment arrangement, let’s say a short-term arrangement—two questions. Number one is: what is “short-term”? What has been the average of a “short-term” currently? Because, obviously, this is an expansion of the commissioner’s power, so there must be some scope currently—just to get an idea for overseas borrowers who might be paying attention, to go, like, “OK, so this is something we’re looking at that’s a six-month thing or short-term expense to a three-year thing, a five-year thing.” It’ll be good to get some sort of range or clarity or average from the Inland Revenue Department.

With that, does that mean that the relief that we’re seeing for both long interest and, also, debt interest is only, again, for the period of that short-term instalment; from the date of instalment to when they’re supposed to pay it off? Which, potentially, if it’s short term—like, six months—also isn’t a significant relief. It’s a good one, but it may not be as significant if they’ve had this debt for 20 years. Just those few questions for the Minister.

11:34

I’ll touch on “short-term” soon—I can’t see where that term is being used—but just in terms of the first question around differential payment: that issue is out of scope, and so it wasn’t considered as part of this bill. The bill was just looking at interest relief mechanisms.

The second question was around new section 138A(2). My understanding, and, hopefully, confirmed by the officials, is that this is the period from—say you entered into an agreement to make repayment over six months; essentially, interest on your debt obligation pauses at that point through to the point you make payment, so that you’re not paying further interest on that. Let me try and explain that a bit better: you make an agreement with the commissioner to make installations over six months to pay off your loan. As part of that agreement, you will get interest relief. You enter into that agreement on 1 January, and you pay it off on—what, six months later? —1 June, something like that.

1 July.

1 July—1 July. The period from 1 January to 1 July, if you’re making those payments ordinarily, would accrue interest, right? You would continue to accrue interest. This says that if you enter into the arrangement and you make the payment in full in that period, the interest that ordinarily would have accrued for that period is just wiped off or cancelled. You don’t have to pay that on top of whatever else is being paid.

11:36

Thank you, Mr Chair. Just for the Minister in the chair’s reference, the part that I mentioned about short-term lump sum—to pay “in full, either in a lump sum payment or through a short-term instalment arrangement”—is on page 22 of the Amendment Paper 559. This is the explanatory note. The student loan discretion to provide relief from interest—second paragraph.

OK, I see—yes, it’s in the explanatory note. So, just for clarification, instalment arrangements can be for up to two years.

Thank you, Mr Chair, and thank you, Minister. That’s actually a really good thing to know, in terms of the two years.

But I want to check, then, following on from the Minister’s response: in which case, if we’re looking at the example that was presented on page 9—so paragraph 15 of the regulatory impact statement—the example with Lana, who had a student loan between 1998 and 2005. In this case, she is someone who had $44,000 in a student loan. By the time she was dealing with the loan that was $120,000; she has then made $77,000. She’s still paying off her loan, but her loan balance is $90,000, over double what she has borrowed.

If she decided to make, I guess, an instalment agreement with the commissioner in that case, would that then—my understanding is there is no interest or debt relief for the fact that she has accrued $77,000 of interest rate over that period; it doesn’t take into consideration that she’s already paid more than double of what she’s borrowed, and she will only get relief for the period if she decided to pay the instalments. If you’re looking at this example, she would have $30,000 left. Let’s say, between 2017 to now—we’re looking at a period of nine years, or maybe 8½ years: in 8½ years, she paid $77,000. But what you’re asking for now is not only, under this policy, that she’s not going to get the relief for that amount; she also must then pay off the remainder of, potentially, $30,000 or more within two years, which is more than what she’s been able to pay off up until now.

I’m just trying to get a sense of—she’s not going to get the relief for older ones; she’ll get a relief for the current ones for the two years that, maybe, she has an instalment—if she’s even allowed to have two years, because two years is the maximum—but, at the same time, she needs to find a way to pay off an even greater amount than what she was able to pay off up until now, in order to try and get a relief for two years. Would that be a correct analysis of that example in the context of what we’re mentioning in terms of new section 138A?

I know that there are other parts of this particular part that others may want to contribute on. I know that we have spent a fair bit of time here on the amendments pursuant to the Student Loan Scheme Act, but I think this is probably one that is quite significant. I want to check, then: if an instalment has been made with the commissioner—let’s say new section 141B, inserted by clause 180AD on Amendment Paper 559, “Late payment interest cancelled if instalment arrangement complied with”, and it does also follow with instances talking about the commissioner’s obligations, “must cancel any late payment”, and I’m also looking at it in conjunction with clause 180AF, “New cross-heading and section 145A inserted”. In new section 145A(2), “The Commissioner [must have] regard to the circumstances of the case … if the Commissioner considers it equitable to do so, write off as much of the loan”. That is on the basis that there is an instalment arrangement being made. What happens if, for whatever circumstance, the loan borrower is unable to make a payment as required of that instalment arrangement? Does that mean the commissioner will cancel the whole arrangement if there’s one payment that’s been overdue, regardless of circumstance?

To give an example, if someone from overseas, who has a reasonable income, made arrangements saying, “I can do this.”, made an agreement with the commissioner, then the person lost their job and they are unable to make the same payment—will the commissioner look at that with sympathy or with equitability, and say, “It’s OK. You know, we would want you to maybe pause for this period, if you’re wanting to find a new job, and we are going to continue with an interest rate or a debt rate, etc., but once you’re able to pay it, your instalment plan continues and there’s no more interest or debt.”; or, at that stage, the commissioner’s like, “Sorry, you missed a payment. That’s it. We’re reverting back. No interest loan or debt interest relief for you.”? So what happens when we get to that kind of situation?

I’m just seeing that the Minister in the chair, the Hon James Meager, is getting some advice. If the Minister is ready to, maybe, respond to that, I’ll leave those questions there for now.

11:42

I’ll go to the example used. There might be some confusion. Essentially, any arrangement that we would come to would be an arrangement between the borrower and the commissioner as to what they could actually afford to pay back in a scheduled rate. I think that we shouldn’t confuse a situation where this example is used just to show how significantly in debt or behind some borrowers can get when they are overseas borrowers. I can’t speak for whether an arrangement could be made in an example like that, or what the arrangement might be, but that is sort of at the extreme end of the example, right? You’re looking at a borrower whose debt is, essentially, six times the original loan balance. Whether or not this kind of scheme would work for them or not, I’m not too sure, but we don’t want to get confused by just using an example of how interest can accrue and cause people to gather more debt over time. That’s more to emphasise the fact that this is a big problem that we’re trying to address, and that’s why we’ve got the carrot and the stick in play there. I just think that, in terms of the details of specific examples, I can’t really go into them much more than just to look at what’s in the legislation that’s before us.

11:43

Thank you for that, Minister. Just, I guess, another question—I appreciate what the Minister in the chair, the Hon James Meager, said in terms of it’s an arrangement between the borrower and the commissioner of what the borrower is able to pay off. Would that, then, be a correct assumption that because, again, this is something where the instalment arrangements need to be paid in full, in which case, if a borrower is unable to meet the full payment within the period of what is considered a short term or a lump sum, that means that a borrower is not eligible to have that kind of agreement with the commissioner and, therefore, would not benefit from this, really—OK, I’m seeing a head nod. Cool. Good to know.

My final question for this clause—and I’ll just signal to the Chair that we’re happy to move on to other parts of Part 5, which I know still has quite a few things—is to do with new section 145A(3) and also (4), inserted by new clause 180AF on Amendment Paper 159. In terms of when we’re looking at if loan interest is written off and, also, the commissioner may reverse a write-off, which kind of answers one of the other things that is mentioned—but let’s say, in terms of (3), has there been any modelling done by IRD, in terms of what would be the likely average or what would be the range of the interest write-off, both in terms of at an individual level but also in terms of the total amount level, noting that Australia, for example, just last year, has written off $16 billion in bad student debt? Is there any sort of modelling done, in that case, from IRD on how much in total will be written off and the average?

11:45

I move, That debate on this question now close.

Mr Chair?

Lawrence Xu-Nan, the Minister is just getting the answer to your last question.

11:46

Thank you, Mr Chair. I just want to seek one clarification from you, noting that we do have a very good officials’ team and also a very diligent Minister in the chair—for example, if this part of the debate is closed, would the Chair allow the Minister to still respond to the question in a subsequent part, if the Minister is still receiving advice? Would that be OK with the Chair?

We’re happy—the Chair will indulge that in the next part.

Thank you so much, Mr Chair. That was all I had for that.

I move, That debate on this question now close.

The question is that the Minister’s amendments to Part 5 set out on Amendment Paper 559 be agreed to.

The question is that Schedule 2 stand part.

11:50

Mr Chair, thank you. I just want to make a brief comment, really, on the title of this bill, the Taxation (Annual Rates for 2025-26, Compliance Simplification, and Remedial Measures) Bill. The “Annual Rates for 2025-26” is—as I discussed earlier, I think, in the second reading, or maybe in the Part 1 debate—a constitutional requirement. It now looks as though we will meet that constitutional requirement, and I assume that the Minister in the chair, the Hon James Meager, is sighing with relief that he’s going to get his bill through, because it’s quite tricky if we don’t.

I do want to just take issue with the next phrase, the “Compliance Simplification”. Frankly, I’m not quite sure what the simplification is, because if we look at the GST and unincorporated joint ventures rules, those are rather complicated. If we look at the new rules for revenue account method taxpayers, which are inserted into the foreign investment fund rules, those are actually rather complicated, too. I pity the people who are going to have to try to sort their way through them in terms of applying them. Then there were further complications introduced in the Minister’s Amendment Paper, so that’s hardly simple law either. In particular, looking at the changes to the thin capitalisation rules around infrastructure expenditure, those are not a simple measure at all.

If we look at all the issues in this bill in terms of whether compliance has been made easier, I don’t think that’s the case at all. In fact, the title of this bill is quite misleading in that regard. I suggest that this bill should be renamed the “Taxation (Annual Rates for 2025-26, Compliance is Never Going to be Simple, and Remedial Measures) Bill”.

11:52

Thank you, Mr Chair. Just before we go on to debates about the title and how complicated tax legislation is—I’ll defer to the member on that, given her expertise and given that I can spell “tax” and that’s about as far as it goes in terms of figuring it out sometimes—

One hopes you pay a little.

Oh, I’m sure we all pay our fair share. We’re obliged to pay.

Look, I’ll go back just to round off the question from Dr Xu-Nan about analysis done on the likely range of interest write-off. It is complicated. The variation in the amounts and the lengths of time that overseas borrowers or any borrower has had a loan vary wildly. The analysis done shows that the proposal is expected to deliver a modest one-off gain of about $1.5 million to the Crown. While that brings some money in, the value of each loan differs. We think the changes will make it more likely that we can collect amounts that would otherwise not be collected.

For example, if you think of some of the very old loans on our books that are of quite low value, if this new power enables the settlement of those loans, we might end up recovering more financially than what the loan’s book value is. That’s, essentially, the extent of the analysis on that. It is a difficult exercise. As members have pointed out throughout the debate, it’s quite difficult to know exactly who is where and what they actually need to be contributing.

This is the debate on the title and commencement; we’ve already had one call on the title. Again, the title just does what it says: it amends the Income Tax Act in order to set the annual rates for 2025-26, provide compliance simplification, and some remedial measures. I take the member’s points that legislation can be incredibly complicated and sometimes make things more complicated. That’s why we have very intelligent experts in all manners of tax to both teach those of us in the real world who want to learn about these things but also come to the House and teach us here as well.

In terms of the commencement dates, there are a number of different commencement dates for different sections. There are various reasons for that. I’d invite members to check out the departmental disclosure statement, which gives clear reason for all of the differing commencements. If you take, for example, clause 2(3), which looks at commencing section 73 on the date of 1 January 2009, those of you who are very good at maths will notice that that is in the past. One of the reasons for that is that it looks to deal with crypto assets and, essentially, ties some of these transactional definitions to the date on which those assets came into being, essentially, in the world.

If members have questions about the commencement dates and want some particular detail, there is some detail for each of those in the departmental disclosure statement. Essentially, most of these dates are coming in at different times to take into account either the complexity in operationalising them—so giving agencies and individuals more time to respond, giving people enough foresight and enough warning to make sure they can prepare for their obligations, and also doing some tidy-ups for those matters that may have arisen in the past that we want to account for when we’re incurring future tax liabilities.

11:55

Thank you, Mr Chair. Thank you for that, Minister. I do want to address the commencement date, but I actually want to address the commencement date for Amendment Paper 559 and Amendment Paper 560.

I’ll start with Amendment Paper 560. The changes to clause 2 are to do with the increase in the in-work tax credit. It says that it “comes into force on a single date set by Order in Council”—that’s in clause 2(25). In clause 2(26): if it “has not come into force by 1 April 2027, it comes into force then.” My two questions for that are: what would be the date that is set by Order in Council? Is there a rough estimate of when that date is going to be, because 1 April 2027 is the day after this scheme ceases to take effect at all? If the Order in Council doesn’t happen, and it naturally comes into effect on 1 April 2027—if we’re looking, on Amendment Paper 560, at section MF 4L(3)(a)(ii) “for the period starting on the change date and finishing on 31 March 2027”—by the time you get to 1 April 2027, there is no increase in base rate by $50 a week.

I think it would be good to reassure everyone that there is a date in mind by Order in Council and it is sometime soon rather than waiting till next year. That’s my first question regarding the commencement date for Amendment Paper 560.

The second one might just be me not being able to see it, and it might be a drafting thing. In Amendment Paper 559—I know we just had a big discussion around clauses 180A and new clauses 180AB to 180AI—I’m just noting that on page 1 to page 2, at no point, even under amended clause 2(23)(h), do those clauses get mentioned as part of the commencement date. Would you be able to highlight what is the commencement date for clauses 180A and 180AB to 180AI? Have I missed something under clause 2?

Usually, there is a catch-all phrase—something like, “everything else commences on X date”—but I’m not seeing that here. Clause 2(1) of the main bill says that “This Act comes into force on the day after the date on which it receives the Royal assent, except as provided in this section.” Am I correct, then, to assume that if Amendment Paper 559 doesn’t mention the particular sections we’re looking at—sections 180A and 180AB to 180AI—those sections come into force the day after Royal assent? Would that be a correct assumption? I’m seeing nods, but if I can get a response to my first question, that would be great.

11:59

Yes, the date by which the Order in Council will be set is—it’s kind of a tautology, but it’s the date on which the Order in Council will be delivered. It will obviously be before 1 April 2027, because the whole point of this is to provide relief that is timely, targeted, and temporary. In our view, it will be as soon as possible after this bill passes through the House.

In response to the member’s question, just so we get it on the record, about commencement dates generally: yes, clause 2(1) is a catch-all for all sections that aren’t outlined in the rest of section 2.

I move, That debate on this question now close.

No. Party vote.

I’ve already declared—a little slow, I’m afraid. Members need to keep up.

The question is that the Minister’s amendments to clause 2 set out on Amendment Papers 559 and 560 be agreed to.

12:02

Thank you, Mr Chair. We have traversed this bill and I’m quite pleased at where we’re up to. I do have an Amendment Paper in terms of this section—Amendment Paper 538—which is on the Table and I’ll just get to it. It’s with regards to new clause 80G.

In regard to the proceeds from lottery gambling and also the online gambling proceeds—we had some submitters that had an issue with when the funding is coming through, but also I wanted to ask the Minister of Internal Affairs: what advice did she receive in terms of the modelling because the Lottery Grants Board will be receiving the proceeds? What I wanted to ask was: will there be a differentiation between the proceeds from the lottery bodies with the online gambling proceeds?

What I wanted to ask—because it was brought through by a couple of the submitters—the issue is around receiving funding or community funding that is returned to the community. Will there be a specific differentiation between what comes through the lotteries side of it and what comes through the online gambling proceeds? The second part of my question—so I’ll just put it how the submitters put it. What they wanted to understand was if it comes through lotteries, that’s clean money; if it comes through online gambling proceeds, that’s termed “dirty” money. Money is money. However, some of the submitters have an issue applying for funding if it’s clean versus dirty.

12:05

Thank you, Mr Chair. Speaking to the Amendment Paper that the member Lemauga Lydia Sosene raised, Amendment Paper 538—as presiding member of the Lottery Grants Board, I am also aware that there will be people who don’t wish to touch money that’s been from the proceeds of online casino gambling and therefore do not wish to apply for a source of funding from this area. The board is also cognisant of this and will provide for applicants to identify the source of money they wish to seek funding from. I don’t consider that a legislative amendment is needed for this matter, as the board can resolve this matter as a board.

Thank you, Minister, for your reply. My Amendment Paper, Amendment Paper 538, does specifically have an addition to an application about how those applying will be able to make their own decision. I appreciate what the Minister of Internal Affairs has said because I, too, am a member on the Lottery Grants Board. It’s just helpful, in part of educating communities when they are going for funding, that they understand where it comes from. But what people wanted to be really clear on is whilst all the funding might go into one bucket, they really wanted to understand that: is there an ability, through the Minister, or did she get any official advice on that differentiation?

12:06

As the presiding member of the Lottery Grants Board, I expect to be receiving advice from officials in this area, but I don’t believe a legislative change is needed because the board is cognisant. I, as a Minister and the presiding member of the Lottery Grants Board, am also cognisant that there will be some people who will not wish to apply and receive funds from online casino gambling. We will ensure that it is clear where some of that money is and which funds it is attached to, so that those people who do not wish to have any of those proceeds from online casino gambling do not touch that money.

12:07

Thank you, Minister. I appreciate—and probably traversing all this may be out of scope. Minister, in your role as chair of the Lottery Grants Board, do you think that officials will provide that advice? Even though my question is out of scope at that other mechanism, I just wanted clarity on that.

Yes, I would expect so, because, as the Minister of Internal Affairs and the presiding member of the Lottery Grants Board, I am responsible for the distribution committees, and so therefore will be taking advice in that capacity.

12:08

Thank you, Madam Chair. I just wanted to ask about service. Because we’re dealing with so many overseas entities, I appreciate that the world is changing rapidly and becoming more networked, but it’s also a situation where post is changing and people’s use of that. In the case of overseas entities, it is more and more easy for people to escape things like the issue of notice.

I wanted to know from the Minister of Internal Affairs what advice she has had on that changing area of service overseas, and whether this informed the way that this is structured, and what kind of eye or review of the successive service there would be in the next little while, given that we are dealing with the pointy end of often quite sharp operators in those areas? Will there be any kind of attempt to look at whether those service provisions are fit for purpose, given this particular application of service? Thank you.

12:09

I can only assume the member is talking about clause 81 in terms of service of notice. Is that correct?

I am, I’m talking about—yes, 81. Thank you. Apologies for not saying so.

That’s all right. I would just point the member to clause 81(1)(a)(iii). It makes it very clear that a notice that can be served on an individual can be served by sending it via email. This is to ensure that cross-border issues can be addressed cross-border rather than requiring a physical person to be present in New Zealand, which gets around any border issues to do with online casinos.

Madam Chair?

Camilla Belich.

Madam Chair, can I just—aw.

I’m not sure it’s a genuine call, Mr Costley. If it is, let me know.

12:10

I look forward to Tim Costley’s substantive contribution on this part of the bill!

Thank you, Madam Chair. I do have a few questions around Part 6, and the questions I have are in relation to Schedule 2, which, I understand, is part of Part 6, as it refers to clause 82.

Yes, that’s correct.

Even though Part 6 itself is not the longest part of this bill and many of the changes that are in Part 6 have been inserted by the Governance and Administration Committee, the consequential amendments to other Acts are quite a substantive part. I had a couple of questions, and other colleagues will undoubtedly have questions around how these changes will impact on other parts of the Government’s legislative framework. Specifically, I wanted to ask first about the anti - money-laundering practices that will need to occur within this bill. Obviously, we’re regulating a market which is currently unregulated, and I do see that there is, appropriately, as it should be, a link to the Anti-Money Laundering and Countering Financing of Terrorism Act.

What I wanted to know is whether we have any evidence to date that in the regime that is currently being operated in an unregulated fashion, this has had any link or there has been any evidence of money-laundering, or indeed, financing of things like terrorism, which is prohibited under our law, and how those particular provisions will come in under those particular pieces of legislation. I’m just wanting some evidence of what the problem issue is that we’re looking at with the changes to this bill, and currently, if there is evidence that that has been occurring, would the current legislation that is listed there in Part 1 of Schedule 2 actually apply to the existing prohibitions on money-laundering? I think that’s quite a big subject area. I think, because we are dealing with international operators, it will be more incumbent on the Government and on this House to ensure that those are sufficient. I look forward to the Minister of Internal Affair’s comments on that.

I also wanted to ask specifically about the changes to gaming duties. With this Act, there are some substantive changes that bring the online casino gambling framework within the Gaming Duties Act 1971. Obviously, that’s quite an old Act, I suppose, or an Act that has been around for some period of time. I just wanted to know whether the provisions in here will, effectively, be allowing the taxation of those offshore providers in the same way as other current gambling operators are already providing taxation within New Zealand under that Act. Is the Gaming Duties Act 1971 able to sufficiently, I suppose, account for—I assume it has been amended substantively since 1971—the nature of the online gambling framework? Obviously, it’s a regime that has been around for a little while.

The third issue that I wanted to raise, within Part 1 of Schedule 2, was that there is a specific change to the Tax Administration Act—in Schedule 7, after clause 34A—and there is a slight change that the select committee has made in there, too, which talks about a specific allowance for the commissioner to allow communication to someone who is an employee of the Department of Internal Affairs. I just wanted to know the kinds of protections around these types of disclosures and what types of employees we’re envisioning may be covered by this type of provision. What is the mischief that this provision is trying to avoid, and what are the types of conversations that the drafters were thinking would occur that will then be prevented by the inclusion of clause 34B?

12:15

To answer the first part of Camilla Belich’s question, she asked about the Anti-Money Laundering and Countering Financing of Terrorism Act (AMLCFT) requirements within the law. The bill does bring online casino gambling operators under AMLCFT regulations because we are aligning it with existing explicitly covered and treated regulations for other forms of gambling here in New Zealand. The Government doesn’t have any specific evidence of any issues of this nature currently, because it has been an unregulated market, which means that the Government hasn’t been capturing information in this area. However, going forward, this will bring it into line with physical gambling here in New Zealand.

Camilla Belich also asked about the gaming duties and whether the provisions allow taxation of offshore operators. Yes, I can confirm that they do. They are already paying a duty tax under other legislation, such as GST, but, at clause 34B, we are removing this, and the answer is no, the Government Amendment Paper addresses this.

12:16

Thank you. I haven’t been on the Governance and Administration Committee on this matter, but I’m interested in the changes to dates. It’s Part 2 of Schedule 2, new regulation 7A. I can see that there has been a decision to take out a simple rule of the 20th day for the returns, and there is a more complicated approach further down in that new regulation.

I’d just like to understand why. I’m particularly interested in whether that is something that is common to other practice. Really, it is just the why: why are we changing that in the way we are? Has there been a problem with that more simple approach? I’m very keen to hear from the Minister of Internal Affairs on that practice. I appreciate it might be for a very good reason. Thank you.

12:17

Thank you, Madam Chair. The member Helen White refers to the dates at new regulation 7A(1)(a). This aligns with the Inland Revenue tax payment dates.

I move, That debate on this question now close.

The question is that Lemauga Lydia Sosene’s tabled amendment to Amendment Paper 530 replacing new clause 80E be agreed to.

The question is that Mike Davidson’s amendment to Amendment Paper 530 amending clause 80D set out on Amendment Paper 558 be agreed to.

The question is that the Minister’s amendments to Part 6 as set out on Amendment Paper 530 be agreed to.

The question is that Lemauga Lydia Sosene’s amendment to insert new clause 80G as set out on Amendment Paper 538 be agreed to.

Now, we come to the voting on Schedule 1, where there’s no further debate. The question is that Lemauga Lydia Sosene’s amendments to Schedule 1 as set out on Amendment Paper 561 be agreed to.

The question is that the Minister’s amendments to Schedule 2 as set out on Amendment Paper 530 be agreed to.

Tamatha Paul’s amendment to Schedule 2 as set out on Amendment Paper 507 is ruled out of order as being inconsistent with a previous decision of the committee.

Mike Davidson’s amendment to Schedule 2 as set out on Amendment Paper 543 is ruled out of order as being inconsistent with a previous decision of the committee.

12:27

I’d like to take a call to discuss the title of this bill, and I appreciate that often people put up flippant things in terms of those titles.

A truer word was never said.

Ha, ha! I’m not intending to do that at all. I wasn’t on this committee, and then I looked at the report and I saw that the Greens have made the point that, in the Cabinet paper, it was seen that one of the primary purposes of this bill was actually revenue gathering. Now, I think that the public need to understand that, and I don’t see that as being made apparent from this title.

I would like to know from the Minister of Internal Affairs whether she accepts that that’s what the Cabinet paper said, because I’m looking at this here and I’m seeing it. I’d like to know where she sees that in the schedule of purposes of this bill, because I am very concerned we are dealing with a group of very vulnerable people; in particular, we’re dealing in my area of Mt Albert with groups that are very concerned about the addictive nature of online gambling to young people in particular and that we might be gathering that very revenue from a vulnerable group. I have Asian Family Services in my network of people I constantly talk to, and they are particularly concerned about the nature of this gambling in the Asian community and that it really is very destructive of families and is really undermining those communities.

What I would like to suggest as a title here is that we simply, straight as a die, put into the title that this is “Revenue Gathering From Online Casino Gambling”. It’s not treating it any differently from anything else, but it’s straight as a die—this is the purpose of what we’re doing. If it isn’t what the Minister is prepared to accept this bill actually does—and that’s what our title should do; be very straightforward about this—I’d like to know why she rejects that title as more informative to the public about the nature of what is going on here. I look forward to her comments. Thank you, Minister.

12:30

Thank you, Madam Chair. Look, I’m as big a fan as any that the law should be given a title that does what it says it does. I think for anybody who is trying to find what the rules are around online casino gambling, making sure that the title says “Online Casino Gambling Act” makes that exceedingly apparent, and there shouldn’t be any misunderstanding of where to go to find the rules.

To the member Helen White’s questions and the suggestion of changing it, I do reject that. The system itself enables revenue gathering, but its purpose is to regulate the unregulated market, which takes us back to: how would somebody find what the rules of the regulations are? They would google “online casino gambling”.

12:31

Thank you, Madam Chair. I appreciate the Minister of Internal Affairs’ answers for the title and, also, her contribution. I want to ask the Minister specifically around commencement, and I do have an Amendment Paper 561 in. One of the concerns, as you’ve heard in some of the contributions, is the impact. Labour agrees with the regulating of this industry; however, we have some concerns in terms of the speed of the amendment bill. We also have concerns about the impact in our community. Members’ contributions from this side of the Chamber have raised the impact on our young people.

Rather than make a speech about it, the Amendment Paper is very clear in terms of the commencement date and the reasons behind us requesting, from this side of the House, that it is important to understand that whilst the bill brings in revenue, it is the impact and the unknowns of online casino gambling. Many of our submitters talked about how young people will have access—and they do now, in an unregulated platform—24/7. The concern is that online casino gambling will be available 24 hours, seven days a week. The difference with the land-based casinos is that you have to physically go there. You have to get in your car and physically go there, and there are restrictions there.

The reason for our push in terms of consideration for commencement—we know that in New Zealand, we have something called social media influencers. Some of our young people are being lured by overseas offshore companies that, if they do this, put out a service or have a product, they’ll get that—they’ll get a big payment. The Department of Internal Affairs have got some very clear guidelines and restrictions. What I’m asking is, in terms of the Minister’s decision, what advice was given to the Minister—we heard a number of submitters raise their concerns about vulnerable groups in our society that are going to be saturated in terms of advertising, in terms of what’s available. Can the Minister explain what advice, what modelling, the exposure to young people—all of these important issues in our community?

12:34

Thank you, Madam Chair. Just starting at the end of that member’s contribution, we’ve already traversed social media influencers and advertisement restrictions within other parts of this bill. I acknowledge that was on a different week, but we are on this week now, on a different part.

I also want to acknowledge that the member’s contribution talked about how, when this law commences and comes into force, it will make online casino gambling available. There was a response from this side of the House: well, it already is. We are commencing this year with the law because the market has been unregulated for far too long. I acknowledge the Labour Party could have regulated it, but they didn’t. It’s been unregulated for far too long already, and it means that if we pushed any time frames out, consumers would be continuing to participate in online casino gambling online with no harm minimisation and consumer guarantee standards.

I’m going to take a call from Helen White, but I do want to say that the last speech strayed quite a long way from commencement, so they need to be very much on point.

12:35

All right. I think the issue of commencement is the one I’d like to speak about in this contribution. The member will be aware that it’s very recent that we have come out with an online harm collaboration in the select committee, which was the Education and Workforce Committee. It really is a very interesting piece of work, because there was an exploration where almost every party—I think, save for the ACT Party—has come up with a real addressing and a suggestion that there was a lot of harm being done—

So is this—

Point of order.

I think I might be about to address the member’s point of order, so please make it again if I don’t. This is title and commencement—very tight.

OK, maybe if I start with why it’s important to commencement—

I think just go to title and commencement, because we’re traversing things that have already been said and not necessarily relating to this piece of legislation—title and commencement only.

Thank you, Madam Chair. My point is that in a world that’s changing so rapidly, the commencement of this bill at this time when this work is starting to be cross-party and there’s an understanding of the harm of addiction in this area, particularly for young people—it is a moving feast. It would be very helpful to see whether the Minister of Internal Affairs has considered that work and the capacity, perhaps, to move the commencement of this out long enough for that work and that understanding to be actually looked at. It is so relevant to the harm that’s being done in the area. It really is a new area for us all as parliamentarians, so I’d like to know whether she’s considered moving the time out long enough to talk to some of those stakeholders. I’m thinking about people like Holly Brooker and the people who’ve been doing the work in that area of online harm for children. Thank you.

12:37

Look, I hope I can close this out pretty quickly. The member Helen White has been here long enough to know what a title and a commencement is. That contribution had nothing to do with this law, and I think it makes a trivial mockery of the parliamentary process that we’re here for today. I would suggest that this debate is actually closed.

I think the Minister should leave the job of deciding when we close to me. There was a vague link to commencement there, but I am getting frustrated with the broadening-out of these speeches, so one more chance—Lemauga Lydia Sosene.

12:38

Thank you, Madam Chair. Thank you that you are allowing one more question on commencement—

On commencement.

You have said to be specifically tight, Madam Chair. To the Minister of Internal Affairs: the commencement date is really important, specifically with the self-exclusion register. What we have before us—and I’ve got an Amendment Paper there, and why it’s important is the horse will have bolted before the cart comes along, in terms of—

I think we’re mixing our—it’s a real kettle of worms, this speech.

You’ve got an amendment bill here—you’ll have your time—and the provision is to allow it to begin, but the self-exclusion register will come at a later date. The question that I have is: what advice did the officials provide in terms of the self-exclusion register for the commencement date?

12:39

Look, I’ll make it really simple, because I know that the self-exclusion register came through the Education and Workforce Committee. This Government has a mission to regulate the online market. We are progressing with the law, with the regulations that the Government had signed off on. As a Government, we have accepted that there was a change at the select committee for this additional area of regulation, which is why there is an extended date for those regulations to be made, because the other ones are already in train.

I move, That debate on this question now close.

Oriini Kaipara’s tabled amendment to clause 2 is out of order as referring to an indeterminate event and not providing sufficient certainty.

The question is that Lemauga Lydia Sosene’s tabled amendment to clause 2 replacing “1 May 2026” with “1 January 2028” be agreed to.

The question is that Lemauga Lydia Sosene’s amendments to clause 2 as set out on Amendment Paper 561 be agreed to.

12:45

Thank you, Madam Chair. We are all aware of what this bill does. It deals with the growing issue, over the past couple of years, of antisocial road behaviour. Colloquially, I think, that’s known as the bad activities of boy racers, but, of course, it’s 2026; we’ve got girl racers—we’ve got all kinds of racers. Sometimes, those racers terrorise our neighbourhoods and terrorise our roads. Now, I know that, in places like Christchurch, there are various by-laws and restrictions in place, including anti-cruising laws around the centre of Christchurch. That may come as a surprise to some members in the Chamber, but if you go around Christchurch, you’re not allowed to cruise around Hagley Park at certain times of the day. For those of you who wish to join us in the South Island, do so sensibly, but do not be cruising in and around Christchurch.

Of course, that’s no help to some areas of the public around our country who are terrorised by really poor behaviour on our roads. I’m talking of things like intimidating convoys. We’re talking about groups of motorists who are determined to do nothing more than spending nights and early hours of the morning doing burnouts on roads, terrorising the neighbourhood, and generally just creating dangerous or reckless situations for the general public.

This is the piece of legislation that is aiming to address some of those issues, and, in particular, this part we’re talking about, the part that amends the Land Transport Act, does a lot of the heavy lifting in terms of creating a new offence of dangerous or reckless activity. It also provides the police new powers to request information connected to some of those offences.

Now, of course, the police have powers to require or ask for information on some occasions now, including when someone has failed to stop. If anyone has done the Otago University first-year law exams, I recall we had to memorise six out of 10 essays. One of those essays was interpreting the “failure to stop” section, so this gives me a bit of a throwback to my law career, and I’m glad that we are now providing the police some additional powers to require that information.

Of course, when these large convoys or when these large gatherings appear and are creating chaos and havoc, it can be difficult to determine who is responsible for those vehicles in order to take the enforcement action later on, such as impounding those vehicles, forfeiting those vehicles, and perhaps even, maybe, crushing those vehicles. This part makes amendments to the Land Transport Act to provide some powers and some enforcement mechanisms in those areas. I’m sure members will have some significantly interesting questions and contributions to make.

12:48

Thank you, Madam Chair. I do want to take just a moment to ask the Associate Minister of Transport, the Hon James Meager, about this because, as I’m sure the Minister is aware, this has been an issue in my electorate in Levin and Ōtaki and some of the other areas. It’s something I’ve been advocating for to the Minister for a while. I even have drafted member’s bill legislation, but, of course, thankfully the Government has chosen to act, seeing the wider issue, and bring this in. I do just want to seek his reassurance that this is going to suitably address that because I think of the two significant events that took place in Oxford Street in Levin. We had police officers assaulted during one.

Also, there’s a need to be able to conduct that follow-up action to go and bring meaningful consequences that will deter further efforts. The police, in the second instance, did a tremendous job in shutting this down and seizing them, but they need the tools, and I want to make sure they’ll be in place. I’m thinking of the residents I met with in places like Miro Street in Ōtaki and Oxford Street in Levin, and even the old Main North Road in Waikanae. I just want to get some assurance—not just for me but for the people that might be watching or engaging with us online—that this tools up the police and it gives them some more powers to go after them, it brings in meaningful consequences, and it’s going to enable us to reassure local citizens that we are giving the police the tools to actually go after these guys and bring some consequences back.

12:49

That’s an excellent contribution. I think it shows the value of good, strong, local representation on issues that are important to parts of the country like Ōtaki, like Kāpiti, like Lower Hutt, and like central Christchurch.

The bill does a number of things to address Mr Costley’s concerns and the concerns of the community in Ōtaki. It creates some new offences for those who are engaging in reckless behaviour. It creates new offences for intimidating convoys, so not only are you having the case where you have to be stationary in one place causing issues but if you are actually travelling on the road and using your behaviour to intimidate other people—maybe up and down the State highway there, Ōtaki to Levin and north of Levin—causing a whole lot of issues on the road, it creates offences for those, too.

It gives police greater powers to identify those who are involved in street racing. It gives the police powers to actually close off those roads where those activities may be undertaken, to take some preventative action, and also to make sure that we can better deal with these issues. It introduces new $1,000 infringement fines and court-ordered fines. It increases the fines for excessive noise.

Another thing it does is it allows police the ability to impound those vehicles, so that those individuals who are facing the consequences of their actions do not go and sell them off to their mates on Trade Me Motors or on Auto Trader NZ—if they still do that—and avoid the consequences of their behaviour. So to the people of Ōtaki, the people of Lower Hutt, the people of Christchurch, you can be assured that help is on the way with this legislation.

12:51

Thank you, Madam Chair. That’s great to hear that from the Associate Minister of Transport, the Hon James Meager, and to see a little bit of electioneering for the member over there. These no-cruising signs in Christchurch that the Minister alluded to are actually quite amusing because there are signs everywhere that say, “No-cruising zone ends here.” I’m assuming that means that that is where the cruising zone starts. If the no-cruising zone ends, the cruising zone must start, and it’s not far from where I live.

Actually, my first question is about one of the centrepieces of the legislation, and it’s new section 39A, inserted by clause 10, which creates the offence of “Dangerous or reckless activity offence conduct in frightening or intimidating convoy”. It just strikes me—and the Minister might want to comment—that this would be quite hard to commit, because to do so, the first thing is that to prove it you have to prove that they’re engaging in a dangerous or reckless activity offence, right?

Subsection (2) lists those. For example, reckless use of a motor vehicle—what it’s traditionally called—would be one. That’s already a very serious offence. In fact, I believe it’s an imprisonable offence. So you’ve got to be engaging in road use that’s already illegal, at almost the highest level; not just careless use of a motor vehicle but reckless or dangerous use of a motor vehicle.

Then it says, “and (b) operates the motor vehicle”, so that’s just being the driver or the user of the motor vehicle, and is “intending it to frighten or intimidate”, and—another “and”—operates that motor vehicle as part of a convoy. You’ve got to have four elements: committing a serious traffic offence, being the operator of the vehicle, being in convoy, and being frightening and intimidating.

Now, it strikes me that you could get a convoy that’s frightening. I think the general public thinks this is what they’re doing: that if there are three cars with stereos blasting and people yelling out the windows, now, that’s not dangerous or reckless, but it’s frightening or intimidating. But you actually have to be doing something which is already an offence—for example, driving not just over the speed limit but dangerously over the speed limit. That would catch it. Or drifting around a corner, which the Minister might not know, but that means when you lose traction and it backslides.

I mean, I guess my point is this: is it the Government’s intention that a convoy of two cars going a bit fast, being loud and threatening, is caught, or does it actually intend that that additional aggravating factor of there being a very serious traffic offence being committed at the same time is intended? It’s those four “ands” in there which are the challenge.

Then, of course, embedded in that section is the other tricky thing, which is intending it to frighten or intimidate another person. Now, if you know any boy racers or girl racers—car enthusiasts—in fact, they don’t think very much at all. They don’t intend to intimidate; they intend to be cool, so I guess that kind of intention thing seems to be a little perplexing. They don’t actually think ahead, so knowing that or being reckless that—they’re not knowing or reckless either; they just don’t even think about it, because recklessness is wilful blindness. They’re not wilfully blind; they’re just stupidly blind, which is an entirely different thing. I’m struggling to see how that particular section will operate in practice, and if the Minister wants to comment on that, that would be useful.

12:54

There was a lot in that contribution from Dr Webb. I think one thing we can say with certainty from that contribution is that he wasn’t electioneering, because of course he’s going to leave us at the end of this term of Parliament, and we will miss his insightful judicial mind and his forensic analysis of bills clause by clause, and also his contribution to the Justice Committee.

Now, of course, the Government’s intention in this bill is to prevent dangerous or reckless activity being undertaken whilst travelling in a convoy. That activity needs to be intended to be frightening or intimidating to another person, or being reckless as to whether or not it is likely to be frightening or intimidating to another people, and the activity that they undertake has to be dangerous or reckless conduct as defined under subsection (2). They also have to be operating the motor vehicle and have to be engaging in that conduct while operating that motor vehicle as part of a convoy.

Dr Webb has asked and answered the questions about what the Government’s intention is. It is intended to create this offence to stop those very dangerous, very reckless, very frightening, very intimidating convoys that are going up and down our highways, up and down our motorways, in and out of our leafy suburbs, all through central Christchurch, causing chaos and frightening people on the road. We think that’s a bad thing and we’re going to stop it.

With that, it becomes time for me to report progress. Thank you.

Progress to be reported.

14:01

on behalf of the Leader of the House: Next week, the House will consider the remaining stages of the Racing Industry (Closure of Greyhound Racing Industry) Amendment Bill and the first reading of the Sale and Supply of Alcohol (Improving Alcohol Regulation) Amendment Bill. Wednesday will be a members’ day.

I thank the acting Leader of the House for his points there. Can I ask him, as it is the lead-up to Easter next week: is it the Government’s intention to utilise urgency, as seems to be common practice, in order to progress the legislative agenda?

on behalf of the Leader of the House: I wish the member opposite a very happy Easter in advance. This Government is a very busy Government. I wish all members all the best for Easter next week.

I seek leave to make a personal explanation to correct an answer I gave during oral questions on 12 March 2026.

Leave is sought for that purpose. Is there any objection? There appears to be none.

On 12 March 2026, I stated, “We have seen nearly 5,500 Māori come off the jobseeker benefit in the quarter ending September 2025.” I should have said, “We have seen nearly 5,500 Māori come off the jobseeker into work for the quarter ending September 2025.”

Well, I’m sure that little information for the House is fascinating to the member, but it was clearly using the House for overt political purposes, which is not appropriate.

Ask him to apologise, Mr Speaker.

No, no—he’s not as good at it as you.

to the Minister of Finance

Will the update on New Zealand’s four fuel alert levels tomorrow include a change in alert levels, or will it be an explainer of what the levels are?

14:04

The latter. We will not be changing the fuel response phase overnight, although it is the case that within a response phase, we will continue to take additional actions, some of which we will detail tomorrow. Tomorrow, we will also provide more information about the criteria we will use to assess when a change in the response phase is required. As the member would expect, these will include things like changes in the amount of fuel in the country.

Will the alert level framework allow for different alert levels to be applied to diesel, petrol, and jet fuel?

Yes.

How much warning will New Zealanders get before moving along the alert level framework?

The member asks a very good question, because what we are determined to do is to ensure that people aren’t in a situation where things change suddenly overnight in ways that aren’t expected. Instead, what we are intending to have is a framework in which we are transparent about the assessment criteria, where we are clear with New Zealanders when an assessment is taking place, and then we announce the decision of what that assessment is. Part of that assessment will include engagement with industry.

Should New Zealanders expect a smooth, gradual progression through the alert levels, or could we jump through them quickly or skip levels given the current trajectory of some fuel stocks?

Our goal is to avoid ever getting to response phase 3 or 4. These are envisaged in the National Fuel Plan as the point at which prioritisation of fuel would be required. Our goal is to be doing enough to source the supply of fuel internationally so that does not become necessary, and, by taking sufficient actions in response phases 1 and 2, that we wouldn’t reach phase 3 or 4. In direct answer to the member’s question, I would not expect us to be skipping through the response phases.

What groups has she met with to consult on how the fuel alert levels will operate?

I’ve directed my officials at the Ministry of Business, Innovation and Employment, together with officials at the Ministry of Transport and officials at the Ministry for Primary Industries, to undertake extensive engagement with industry, both fuel companies themselves and fuel users, and a range of industry-affected entities. This morning, together with the Minister of Local Government, we briefed mayors and their staff from local government. I have individually met or had phone calls with a number of chief executives and other industry representatives.

Has Shane Jones discussed Crown funding, including using the surplus in the petroleum or engine fuel monitoring levy fund, to increase diesel storage capacity at Marsden Point more quickly than would normally be the case?

I’m not responsible for which discussions Shane Jones may or may not have had. If the member wants to ask Shane Jones a question, she can.

Is economist Brad Olsen right to warn New Zealanders that the crunch on diesel seems to be coming closer quicker, and is starting to become worrying, given the importance of diesel to the productive economy?

We’re not sure that Brad Olsen has calculated his figures correctly, in that he isn’t able to see the ships that are on the way and the amount of diesel that is in them, and therefore what is required. Critically, what New Zealanders need to understand is that we agreed that keeping a focus on diesel is very important, because obviously that is the fuel that so much of our industry and productive economy leans on and requires. It’s also the case that that is the fuel that, internationally, has been most disrupted by events in the Middle East. It is the fuel which has, according to all of the studies that have been done, the least elastic response to price, which is to say that people don’t tend to substitute it in the way that they do petrol—when the petrol price goes higher, people don’t tend to use as much, whereas diesel users do not have as much choice. All of that, taken together, means we have a real focus on diesel. Something I would highlight for everyone is that in New Zealand, we legally require every company that is importing fuel into the country to have a minimum stockholding obligation (MSO) of at least 21 days’ worth of diesel. What that means is that they face fines of millions of dollars if they breach that requirement. That is intended to provide safety and a buffer, and we would expect to be notified if there was any risk of those MSOs being breached, and we have not had any such notification.

Can the Minister confirm that the strategy that she refers to will reflect the lessons learnt from the COVID experience and avoid arbitrarily introducing restrictions on New Zealanders?

What a stupid question.

You were sitting at the Cabinet table, Shane!

Our goal, obviously, is that we recognise that fuel is very important to our economy—

Jab—jab. COVID failure.

—and so taking steps now—

You were sitting at the Cabinet table.

You forgot where you were, Jonesy.

Just a moment. This is a very important matter that troubles a lot of people throughout the country. We will hear answers in silence.

We recognise that fuel is vital to driving our economy, supporting jobs and incomes, so that is why we are taking a precautionary and prudent approach now, because it is the case that if we were to reach response phase 3 or 4, then the potential disruption to New Zealanders and industry could be significant. While we are doing everything we can to prevent getting to that phase, in the meantime we are conscious that we have the gift of time to work through what that prioritisation would look like, and we have taken an approach that says we will iterate that together with industry. Noting that, in the past, when arbitrary classifications have been offered by Government, there has been very good feedback and engagement from others, who have said, “Actually, that needs to change.” So when we offer our indicative prioritisation, we do expect there to be feedback from a range of stakeholders, and we will be listening to business and industry so that we get it right.

14:10 · to the Minister for Social Development and Employment

What funding increases, if any, can food bank and food rescue organisations expect to receive in Budget 2026 to support the one in three households who are struggling to put kai on the table, as reported by the Hunger Monitor, during rising fuel price pressures?

14:11

on behalf of the Minister for Social Development and Employment: We know that many families are being hit hard by the global fuel price shock. That is why are delivering targeted support for low and middle income working parents, by increasing the in-work tax credit. I’m unable to comment on Budget decisions prior to the Budget.

Does she accept that rising fuel prices will have a big impact on food prices, and, if so, will the Government be offering any additional financial support to beneficiaries, superannuants, and students so that they can continue to afford kai?

Obviously, the duration of the crisis in the Middle East will determine the impact and the level of impact, but I would note that on 1 April, beneficiaries and superannuants will have an increase in assistance. I also note that the Ministry of Social Development (MSD) has support available to individuals in hardship that need assistance to meet immediate needs such as food. So there is assistance coming on 1 April, and there is the ongoing assistance that MSD provides.

If the Government cannot offer any financial support for low-income whānau, can they commit to a 165 percent funding boost for food banks to make up for the 165 percent increase in people receiving food support since 2020?

I did, in fact, in the previous question, note that additional assistance would be available on 1 April—that the Consumers Price Index increase will occur for the beneficiaries, and the superannuation increase will also occur. So there are increases about to occur. However, I note also that MSD still has that ongoing support available for those individuals in hardship that need assistance, and that does include for food.

14:13 · to the Minister of Education

What announcement has she made regarding New Zealand’s national qualification?

14:14

Today, I announced the first major step in rebuilding New Zealand’s senior secondary qualification, with Cabinet agreeing to major structural decisions to replace NCEA with a new system that is clear, consistent across schools, and internationally comparable. The new qualification across years 12 and 13 and the stand-alone foundational award in literacy and numeracy will be phased in from 2028 for the foundational award; 2029 for the year 12 qualification; and 2030 for year 13. This is about restoring confidence in our national qualification and ensuring it supports deeper knowledge-rich learning so every student can succeed.

Why is the Government replacing NCEA?

Well, for too long the current system has struggled to provide clarity and confidence. NCEA has become increasingly fragmented and inconsistent across schools, and too often students have been able to accumulate credits without building the knowledge and skills they need for the future. It’s not fair on our young people, and it does not give parents, employers, or tertiary providers the confidence that they should have in a school qualification. We’re putting that right by building a system with high expectations, consistency, and student achievement at the core.

How will the curriculum drive what is being assessed in the new curriculum?

As we speak, 86 writing groups of writers and subject experts schools across the country are creating a senior secondary curriculum in 175 subject areas. This national curriculum will be internationally benchmarked and will drive what is assessed in our new national qualification. All students will receive deep learning in nationally consistent subjects to ensure they are set up for success beyond school.

What feedback has the Government received from the sector about these changes?

This work has been shaped by extensive sector engagement; more than 10,000 New Zealanders took part in consultation, alongside detailed input from a principal advisory group and sector experts. There was clear support for structural change to our national qualification that is simpler, more consistent, and better aligned to what students need for the future. A principal wrote to me following this morning’s announcement to say, “Well done and thank you for being courageous and following through on this. It will make a huge difference and the positive generational shift”—the text isn’t quite right, but it basically says that it will make a huge difference and the positive generational shift that we’ve been looking for. [Interruption] I would be very careful, I say to the Opposition, making accusations of which principal that came from. We have amazing principals across New Zealand who are all doing an exceptional job and they all deserve our respect.

Will her next NCEA announcement have any of the detail that we were all hoping to see in this NCEA announcement?

We are taking the time to get the details right. Consultation—[Interruption]

There’s not much point asking a question if you don’t want to hear the answer.

Genuine consultation is about making sure you take time to get the detail right and properly engaging in the complex interplay of technical decisions that need to be taken. We’ve put together a technical advisory group to work alongside our professional advisory group, to take this very complex set of decisions. It’s this good process that’s required to get this right. Perhaps if this good process had been followed the last time NCEA was refreshed, it wouldn’t have been such an unmitigated disaster—take note.

14:18 · to the Minister for Māori Development

Does the Minister stand by his Government’s track record on Māori employment, and, if so, why?

Yes, I stand by the Government’s track record on Māori employment, particularly given that between 5,000 and 6,000 Māori came off the jobseeker benefit and into work in the quarter ending September 2025—a fantastic result, in my view.

Does he expect the Māori unemployment rate to increase even further, given the announcement of the proposed closure of food-processing plants, including the announced closure of McCain’s in Hastings?

As this House knows, we have been absolutely focused on enabling a number of fast-track Act projects throughout the country, whether or not they are geothermal, aquaculture, property developments, or others. Some of those fast-track projects—in fact, nearly 25 of the 149 in Schedule 2 of that Act—are either Māori-partnered or -led. It’s absolutely marvellous that Ministers—

Hear, hear!

—exemplary Ministers like Minister Jones—have announced matters such as the—

Mine! Mine!

—geothermal strategy. Of course, there is a range of other quarrying and mining initiatives that employ Māori.

Point of order, Mr Speaker. [Interruption]

Points of order are heard in silence.

Thank you, Mr Speaker. The Minister hasn’t even addressed the question. The question was specific: does he expect the Māori unemployment rate to increase even further, given the announcement of the proposed closure of food-processing plants, including the announced closure of McCain’s in Hastings? He hasn’t addressed it even slightly.

Well, the question would be: can he address it? I’ve got to sit here and listen—I’ve heard his answer, and certainly what was going through my head was how on earth could he know what the ethnic or racial mix of the employment profile for those particular factories are. He can’t answer it. Have you got another supplementary?

What support, if any, will be provided to Māori in South Auckland, where Māori unemployment is at 20.6 percent—almost four times the national average—under this Minister’s watch?

As this House has heard on several occasions from across different Ministers, there are a number of initiatives that the Ministers in this Government and this Parliament, in fact, have encouraged to ensure that there are more jobs created throughout Māori communities and a range of other New Zealand communities, as well, whether or not that’s through the fast-track processes; through some support around the Regional Infrastructure Fund led by Minister Jones; or through some of the mahi that, ultimately, Minister Stanford has been leading around education to create a whole range of talented, bright, young Māori graduates from schools. They may seek work and build enterprise in New Zealand, or they may go overseas and seek work and build enterprise overseas—and where has the old Willie Jackson gone, when 25 years ago, as an Alliance MP, he came to New York City and saw my overseas dreams and was absolutely encouraging of that?

How—[Interruption]

Just a minute, Mr Jackson. All right.

How will current policies address the needs of Māori in West Auckland, where unemployment sits at 17.3 percent?

You see, that’s the challenge that the member opposite has on a range of matters: he thinks that the Government is the solution to everything. On this side of the House, we don’t. We think that it is to enable interest rates and inflation rates to come down, to stop the wasteful spending that was curated under previous Governments, and to ensure that the business and enterprise regulatory framework is available to create jobs and not just handouts.

Point of order, Mr Speaker. Thank you, Mr Speaker. I would like to ask again: how did the Minister address that question? The question was specific: how will the current policy address the needs of Māori in West Auckland, where unemployment sits at 17.3 percent? Surely, he hasn’t addressed the question.

Well, he listed some Government policies. Have you got another supplementary?

I’ve got plenty of supplementaries, Mr Speaker.

Well, that’s good.

But to the—I still don’t understand that response, but kei te pai, Mr Speaker. To—

Well, hang on a minute—just a minute. Mr Jackson, you won’t be carrying on if you want to challenge like that. I don’t judge the questions—I do initially with the primaries, but not so much the supplementaries—and I certainly have no responsibility for the answers. But I can work out whether or not there has been a reasonable addressing of the question. That’s what I’m required to do.

What does he say to the Hastings mayor, Wendy Schollum, who said she is “devastated” about the closure of McCain’s and “desperately concerned” about the families who will be impacted?

No one in this House wants to see large industries shut down. That’s why we’ve been absolutely focused on making sure that we build the infrastructure that this country requires to move and to, basically, build for the future. That’s why I expect members opposite to support all our infrastructure activities around new schools and classrooms across the country; around new roads of national significance; and around a whole range of economic initiatives that this Government is undertaking, including the mahi that Minister Jones has been leading in the regional infrastructure space, like mussel factories and spat factories.

How can he keep claiming the Government is delivering for Māori when the clearest delivery so far has been more Māori out of work and things getting worse, not better, under this Minister’s watch?

On Friday, I had the great opportunity to go with the hard-working East Coast MP, Dana Kirkpatrick, to a wonderful place called Kawerau. It’s a place that welcomes industry, it’s a place that welcomes business, and it’s a place that welcomes hard work. The geothermal facility opened there by Obayashi Corporation, alongside Eastland Generation and Tūwharetoa mai Kawerau ki te Tai, absolutely exemplifies Māori development creating jobs, creating business, and actually moving the country forward. That’s the sort of mahi that this Government is into and wants to support in the future.

Can the Minister confirm that sensible economic management is important and beneficial no matter your ethnic background; that if you have a Government that spends carefully, that manages the economy well, that’s good for everybody, but if you have a Government that splashes the cash and drives inflation and interest rates and puts us all into debt, that’s bad for Māori as much as anyone else?

Absolutely. It’s absolutely warming that the members of this coalition Government want to see all Kiwis, including Māori, succeed.

14:25 · to the Minister of Health

What recent announcements has he made about preparing the healthcare system for winter?

Last week, I announced that Health New Zealand will invest an additional $25 million to prepare our healthcare system for higher demand over the busy winter months by boosting hospital capacity and increasing staffing. This important investment in preparation for winter will deliver up to 378 additional front-line staff, 71 extra winter hospital beds, and up to 567 short-stay beds in aged residential care to free up hospital capacity. The plan focuses on four key priorities: prevention, strengthening primary care, improving emergency department (ED) and hospital flow, and supporting timely discharge. By planning early, expanding capacity, and supporting our front-line teams, we are providing the tools needed to better manage increased demand during winter and deliver the care New Zealanders need.

How will this investment support improved performance in our emergency departments?

We know that following the reintroduction of our health targets, Kiwis are spending less time in EDs across the country, with the latest quarterly results for October to December 2025 showing 74.2 percent of patients being admitted, discharged, or transferred within 6 hours, up from 72.1 percent at the same time the year before. However, we know there is still more work to be done, particularly as we head into the winter months. Our hospitals will face increased demand during winter due to a growing ageing population. By increasing capacity and front-line staffing, we’re helping to prepare the healthcare system for this.

What role does prevention have in improving performance over winter?

The plan to prepare our hospitals for winter ensures a stronger focus on prevention. We know that prevention is key to reducing pressure on our hospitals. That’s why this plan is prioritising more flu vaccination opportunities, targeted support for older people and those at higher risk, access to anti-virals, stronger vaccination support in aged care, and easier access to multiple vaccinations in a single visit. This is alongside our work to strengthen primary care by launching a 24/7 digital consult service and expanding urgent and after-hours care clinics up and down the country.

What else is the Government doing to ensure hospitals can better manage demand over winter?

Alongside increasing capacity in our hospitals, this plan to prepare our hospitals for winter places a strong emphasis on improving patient flow and supporting timely discharge. That includes expanding Hospital in the Home services so more patients can recover safely at home, increasing the availability of transitional and aged residential care beds, and strengthening allied health support to help patients return home sooner. We’re also improving weekend discharge processes and ensuring better coordination across the system so beds are available to those who need them the most. I want to thank our hard-working doctors, nurses, and allied professionals in our hospitals, who work incredibly hard each and every day. This plan is to support them and the incredible work they do.

14:28 · to the Minister of Housing

Is he concerned about the report from Cotality that showed the average rent-to-income ratio is as high as 28 percent; if not, why not?

14:29

on behalf of the Minister of Housing: I am advised that rent-to-income ratios were 27.9 percent in quarter four 2025, according to Cotality, a reduction from 28.2 percent in quarter four 2023. The measure has stayed relatively flat during our time in Government. I’m also advised that under the previous Government, the measure grew from 26.1 percent to 28.2 percent in 2023. This matches with other measures that prove that under this Government, rents are plainly more affordable for many. The social housing register is down, the share of first-home buyers in the market was at record levels at the end of last year, and we have far less tamariki and whānau in emergency housing. The member may also read the rest of the Cotality report, which shows that housing affordability has improved to its best level in almost a decade due to stable housing prices, rising wages, and falling mortgage rates. It says that in quarter four last year, the house-price-to-income ratio was 7.2, down from above 10 in 2021. This Government doesn’t just talk about it; we deliver on housing affordability.

What does he think would be an affordable average rent-to-income ratio?

What we know is that housing affordability and rent affordability has come down, whether or not it’s come down from 3.1 percent in the year to January 2026 according to TradeMe data or a range of other data and evidence-based facts that show that rents have either stabilised or are coming down slightly.

How is the Government making progress on rental affordability when renters in places like Rotorua, Gisborne, and Tauranga are spending more that 30 percent of their income on rents?

What we know is that a range of data points show that credible measures of rent price changes show that rents are flat, whether or not it’s the stock measure, which is the most well-known measure for rental affordability, which shows rents are just under 1 percent in the year to January 2026, which is lower than inflation. What we won’t do—what we definitely won’t do—is start going around putting rent controls on everyone.

What evidence does he have that rent controls would do anything other than put a limit on rents that New Zealanders already can’t afford?

How many cities need to try and fail at solving their rental challenges through rent controls for the Greens to learn? Rent controls don’t work. The Greens’ housing plan, in general, would make the housing market in New Zealand much worse.

No, no. Just talk about the Government’s answer.

OK. The member claims to believe in evidence-based policy, but, in fact, the evidence shows that rents have stabilised or come down over the last couple of years. Actually, we’re really proud of not only doing that but seeing the social housing register come down and also getting rid of the motel generation, birthed long-term by the Opposition, of course.

Does he have confidence that his Government’s policies are working to lower house prices when Treasury is forecasting house prices to increase 6 to 7 percent a year for the next four years?

What I am confident about is under the leadership of the Minister of Housing, Chris Bishop, and the Minister of Finance, Nicola Willis, we’ve seen the average per square metre build rate of Kāinga Ora come down, unlike the previous group.

What policies does the Government have to permanently lower rents besides engineering a recession and scaring 200 New Zealanders out of the country every single day?

That comes from a very dark and dank place, that comment—very dingy. What we’re all about is making sure we’ve got the basics sorted, infrastructure in place, better energy prices, e mihi ana ki a koe e te Matua Tararā [I congratulate you, Dalmatian gentleman], and all the necessary steps and phases to ensure that, actually, housing is affordable. Guess what! That facts say so. The evidence says so.

14:33 · to the Minister for Social Development and Employment

How many people, if any, receiving benefits or superannuation have children in their care and are also in paid employment?

on behalf of the Minister for Social Development and Employment: I can advise that there are more than 47,000 working-age people who receive a main benefit from the Ministry of Social Development who have children in their care and who are receiving some other form of income.

How many people who receive superannuation or a benefit have children in their care and who are also in paid employment will get the $50 a week fuel relief?

We acknowledge the impact of the global fuel price shock on families and households and businesses right across New Zealand. The $50 increase in the in-work tax credit is aimed at low and middle income working families with dependent children. We know that around 143,000 families will receive the full $50 weekly increase. That will include 48 percent of children in material hardship. The policy is targeted, timely, and temporary to minimise inflation.