Parliamentary debates: Thursday, 28 May 2026

14:00

Almighty God, we give thanks for the blessings which have been bestowed on us. Laying aside all personal interests, we acknowledge the King and pray for guidance in our deliberations that we may conduct the affairs of this House with wisdom, justice, mercy, and humility for the welfare and the peace of New Zealand. Amen.

A petition has been delivered to the Clerk for presentation.

14:01

Petition of the Sheralyn Tipene-Weepers Charitable Trust requesting that the House urge the Government to fund full 24/7 access to a catheterisation laboratory at Dunedin Hospital.

That petition stands referred to the Petitions Committee.

I present the report of the Controller and Auditor-General entitled The Auditor-General’s auditing standards 2026. That paper is published under the authority of the House.

A select committee report has been delivered for presentation.

Report of the Finance and Expenditure Committee on the review briefing on the 2024-25 annual review of New Zealand Green Investment Finance Ltd.

The report is set down for consideration.

The Clerk has been informed of the introduction of a bill.

Appropriation (2025/26 Supplementary Estimates) Bill, introduction.

The bill is set down for first reading.

I present the Supplementary Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2026.

That paper is published under the authority of the House.

14:02

I present:

• the 2026 Budget Speech
• the Budget at a Glance 2026
• the Fiscal Strategy Report 2026
• the Child Poverty Report 2026
• the Summary of Initiatives 2026
• the Budget Economic and Fiscal Update 2026, including supplementary information, and
• the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2027.

Those papers are published under the authority of the House.

The Appropriation (2026/27 Estimates) Bill is set down for first reading immediately.

I move, That the Appropriation (2026/27 Estimates) Bill be now read a first time.

The Appropriation (2026/27 Estimates) Bill is set down for second reading immediately.

14:05

I move, That the Appropriation (2026/27 Estimates) Bill be now read a second time.

E ngā iwi o Te Ūpoko o te Ika. E te Māngai, ngā mema Pāremata o ngā rohe pōti me ngā mema o ngā Rōpū Tōrangapū. E te motu whānui.  Nei rā te mihi. Anei te Tahua 2026.  Kia ora e te iwi!

[To the home tribes of Wellington.  To the Speaker, electorate, and party list MPs.  To the whole country. I salute you.  Here is Budget 2026.]

This is a responsible Budget. The Government is responding to an increasingly uncertain world with an economic plan and sensible choices that will make New Zealanders more secure in the years ahead. The documents I have tabled in Parliament today show that New Zealanders can look forward to growth, higher wages, and rising employment. They can look forward to better public infrastructure, expanded healthcare services, better schooling for their kids, and safer communities. They can look forward to a much stronger set of Government books.

Despite the chaos in the Middle East, and challenging global events, the Government’s responsible approach means Treasury is now forecasting a return to surplus in 2028/29—that is a year earlier than forecast in December. An earlier surplus means less debt and lower interest costs than would otherwise be the case. The Government is tackling New Zealand’s major challenges, not with shallow quick fixes, but with a responsible and durable approach. Today’s Budget marks further progress towards a more secure future.

I don’t expect New Zealanders to read every page of it. What I really want Kiwis to know is that this Budget is about you. It delivers on the Government’s belief that life can be better in this country, not just for the voters of today but for their kids and grandkids too. I think mums and dads across this Parliament and across the country want the same thing I do. We want this to be a country our kids choose to grow up in and then choose to live in when they grow up, because it’s a place where their achievements will be rewarded and where their dreams can be realised.

Yes, the world has thrown us some curveballs. I recognise that too many Kiwis are doing it tough right now. But New Zealanders listening today should have confidence. They should have confidence that the Government is spending their money wisely, that it is addressing the country’s big problems, and that it’s making investments in the things that really matter. That’s important not just for today but for what lies ahead. The world is more volatile than ever. The rules-based global system is under strain. Countries are boosting their spending on defence. Global competition for growth, jobs, and investment is sharper than ever. And conflict in the Middle East means Kiwi households and businesses are paying more for petrol and diesel.

What is more, New Zealand entered this period in a more fragile state than we would like. New Zealanders have shown real grit to recover from an extended period of runaway price increases, high interest rates, and the weaker economy that emerged as a result. An economic recovery has been unfolding but scars run deep. The Government is also carrying a significant burden of debt—more than twice as heavy as it was seven years ago, and with an annual interest bill of $9 billion. New Zealand’s sovereign credit rating has a negative outlook from ratings agencies Fitch and Moody’s, which is a warning that we must start bending the debt curve down.

New Zealand’s population is getting older, meaning the bill for delivering healthcare, New Zealand Superannuation, and other public services is becoming heftier for our workers to shoulder. The annual cost of superannuation is rising sharply, from less than $20 billion in 2023 to more than $30 billion by 2030. In the next year alone, the cost of super will rise by around $1.8 billion.

At the same time, extreme weather events are becoming more frequent. Economic shocks, which, unfortunately, have happened with some frequency over the past 20 years, will keep happening. This Government is having to play catch-up on much-needed policy reforms, from housing to energy to resource management. There’s no hiding from these big issues. Yet in an election year, some will choose to ignore this context and instead suggest band-aids and sugar hits, all slapped on Afterpay. Not only does that approach ignore the real challenges New Zealand faces but in the absence of a magic money tree, it’s our future selves who’d have to foot the bill—with interest. So, the Government is taking a more responsible approach. We are determined to deliver Kiwis real solutions that last, and to do so within very real financial constraints. Conflict in the Middle East has been a setback but New Zealand can and will bounce back. That is reflected in Treasury’s forecasts.

This responsible Budget makes significant investments in health, education, law and order, and other front-line public services. As a result, New Zealanders will experience more progress towards the Government’s targets, including reducing health waiting times, increases in educational achievement, reductions in violent crime, lower levels of welfare dependency, and a more capable defence force.

The Budget also provides $7 billion worth of new capital investment to help deliver the public infrastructure New Zealand needs. We’re making a funding commitment to construction projects like Whangārei Hospital, 10 school redevelopments, the next stage of the Waikato Expressway, a series of State highway resilience projects, new courthouses for Rotorua, and new police stations in Greymouth and Whanganui. These infrastructure projects will support more jobs for Kiwis, with the Infrastructure Commission estimating that every billion dollars’ worth of infrastructure funding supports around 4,500 jobs.

What’s more, with careful spending choices and ongoing restraint, the Government is set to get the books back to surplus earlier than previously forecast, and we are set to bend the debt curve down. That’s what a responsible Budget looks like.

Let me turn to the economic and fiscal outlook. A broadening export-led economic recovery was under way in New Zealand at the start of 2026, with employment and confidence increasing. In late February, conflict in the Middle East shocked the global and domestic economy. No one really knows for sure how this conflict will unwind or how long its impacts will be felt. We wish it to be over as soon as possible. In the midst of uncertainty, Treasury puts forward its best professional judgment. Its central forecast assumes that the impact of the crisis will be temporary. Over the next 12 months, it expects that fuel prices will contribute to higher inflation and lower real GDP growth than previously expected and would have otherwise been the case. But inflation falls after the current quarter and economic growth then picks up. Annual average growth in the year to June 2026 is forecast to be 1.2 percent, accelerating to 2.3 percent by June 2027, and accelerating again to 3.2 percent by June 2028. That is a healthy rate of growth. That growth will be accompanied by new jobs and higher wages.

Over the next four years, Treasury is forecasting employment to grow by 220,000 jobs, members; our forecasting wage growth to average 3.1 percent. Over this period, core Crown tax revenue is expected to be more than $9 billion higher than was previously forecast. That may be surprising, given the fuel crisis, but a lot of factors feed into tax forecasts, and I’m assured by the Treasury, that over 90 percent of the revisions to tax since the last update have nothing to do with the Middle East. In fact, on balance, that crisis has made the books worse. Instead, as a share of GDP, tax revenue rises over the forecast period, but core Crown expenses go the other way. They are initially steady, then fall to 30.3 percent of GDP in 2029/30.

The Government’s long-term objective, of course, is to get core Crown expenses down to 30 percent of GDP. Reaching 30.3 percent by the end of the forecast period therefore represents extremely good progress on our fiscal plan, and it reflects the Government’s disciplined approach to spending. That disciplined approach is illustrated by the Budget 2026 operating package. Last year, we set an operating allowance for this Budget of $2.4 billion per annum on average, which Treasury duly put in their forecasts, and which various commentators said would go bust in election year. Well, in Budget 2026, we have spent less than this. Yet again, this Government has come in under its allowance. The actual net operating package in Budget 2026 is $2.1 billion. The net package incorporates $3.8 billion of new spending a year, on average. That’s because we’ve topped up our operating allowance with $1.7 billion of savings and revenue, the main sources of which are already known to members of this House: a fundamental overhaul of the Public Service, the end of the final-year Fees Free scheme—which failed—and also, I can share with members today, Kāinga Ora’s reduced construction costs, which while they continue to increase productivity, has resulted in $368 million of lower operating expenses.

This disciplined spending approach, and a forecast improvement in revenue, improves the track for the Government’s headline operating balance indicator, OBEGALx. OBEGALx is now forecast to return to surplus in the 2028/29 fiscal year—that is a year earlier than previously expected. Members, this will be the first time in a decade that the books have been in the black. Now, of course, at every update I am conscious that OBEGALx is the small difference between two very large numbers, and that small differences matter when the balance is close to zero. Forecasts are not set in stone; they can move around, and it takes a lot of work to turn them into reality. That remains true, but it’s heartening to see for the first time that the surplus date is coming forward, not being pushed back, and that, at $2.6 billion, we have some room to move.

The track for net core Crown debt has also improved. Treasury’s forecasts show the debt curve bending down, and they show it bending a year earlier than previously expected. Net core Crown debt is forecast to peak at 46.1 percent of GDP in the 2027/28 year, which is lower than at the Half Year Economic and Fiscal Update in December. It’s then set to decline to 44.4 percent of GDP by the end of the forecast period. This improvement in the books, members, is reflected in the Government’s borrowing programme. New Zealand Debt Management has announced today that it has lowered its forecast issuance of Government bonds by $6 billion over the next four years. This is the first downward revision to the borrowing programme since 2021.

The Budget 2026 operating package is front-loaded, which partly reflects the Government’s decision to provide temporary, timely, and targeted funding to respond to the fuel crisis. As previously announced, the Budget funds a temporary increase to the in-work tax credit of $50 a week, supporting up to 157,000 low to middle income working families. We are making life easier for them and their kids at this difficult time.

Government agencies that rely heavily on fuel to deliver front-line services, including Police, Fire and Emergency, and education, have also received additional funding to maintain their operations and support our front-line services. Funding has also been set aside to help public transport authorities manage fuel cost pressures and keep services running. The Minister of Health has announced a temporary 30 percent increase in mileage rates for home and community support workers and for people travelling for specialist treatment, and $150 million has been set aside to increase New Zealand’s strategic fuel reserves. Some of that will be used to fund the previously announced deal with Z Energy, which has lifted New Zealand’s diesel reserves by nine days. While precise numbers are commercially sensitive, I can assure you that even accounting for this existing deal, the $150 million fund still has room for future increases in strategic fuel reserves, if needed. The Government has also set aside funding of $450 million in a time-limited contingency in case further fuel-related support is required.

We join all Kiwis in the hope that fuel prices and supply pressures won’t increase further and will follow the forecast by Treasury and come back down. However, it is prudent to be ready for a scenario in which fuel prices could spike or stay higher for longer. We have created a reserve—much like some households have an emergency savings account. You hope you don’t have to dip into it, but if you do, it is there. It is also funded from the operating package, which means if we do have to use it, members, it won’t add to forecast debt.

Boosting New Zealand’s security and resilience are major themes in this year’s Budget. New Zealand faces the most adverse and contested geostrategic environment in the past 80 years. While we cannot control the actions of other countries, we can ensure we have the capability to defend and advance New Zealand’s interests. Last year’s Budget funded the first year of the Defence Capability Plan, including a capital pre-commitment of $1.6 billion. Budget 2026 funds the second year of the plan, which includes extending the operational life of the Anzac-class frigates and HMNZS Canterbury, acquiring new drones, building modern housing for our service men and women on military bases—they deserve it—and delivering a new training facility at Linton. We are supporting the men and women who are prepared to put their lives on the line for our country. Our capability plan provides funding to increase defence force numbers in key occupations and to retain existing staff. It provides a $156 million uplift for our intelligence and security services, and it boosts New Zealand’s aid programme, providing $110 million to increase development and humanitarian assistance here in our backyard, in the Pacific and Indo-Pacific regions. It provides $145 million to ensure a resilient, safe, and secure offshore diplomatic network.

New Zealand is subject to severe and unpredictable weather events, alongside other natural hazards. We have seen that play out dramatically in recent months. Budget 2026, therefore, invests in stronger infrastructure, smarter emergency management systems, and better information about natural hazard risks. It sets aside $400 million of capital for State highway resilience projects in regions whose roads are too often closed after major weather events. The Government is making the responsible choice to strengthen roads before they fail, rather than repeatedly paying to rebuild them afterwards. The projects include, members, resilience improvements on State Highway 2 through the Waioweka Gorge, State Highway 3 through the Awakino Gorge, State Highway 25 through the Coromandel, State Highway 60 over Takaka Hill, State Highway 6 between Cromwell and Kingston and between Haast and Hāwea, and State Highway 94 between Milford and Te Ānau. The Budget also provides a capital contribution of $1.8 billion for a new road of national significance, the Cambridge to Piarere Expressway. This critical freight and economic link will extend the Waikato Expressway from Cambridge to the turnoff to Tauranga. This is a project that will support freight, and it will support a growing part of the country in what is often called our golden triangle. The Budget also puts aside just over $1 billion for KiwiRail’s network improvement programme, alongside $107 million to continue the renewal of critical metropolitan rail infrastructure for urban commuters.

The Government is getting better hazard information across the country, including the first New Zealand flood map to help councils, communities, infrastructure providers, and property owners make smarter long-term decisions. The Budget also provides funding to help develop more cost-effective ways for the Crown to manage its own infrastructure risks and reduce costs to taxpayers. The Government has allocated new funding to modernise emergency management systems so that when disasters strike, emergency services can respond faster and coordinate more effectively. Mark Mitchell has been their champion.

Reliable and affordable energy underpins a growing economy. That’s why Budget 2026 includes a gas transition loan scheme to help businesses transition from New Zealand’s shrinking reserves of natural gas. It also provides capital funding for the purchase of around $200 million worth of new shares as part of Genesis Energy’s $400 million capital raise, which they announced in February. Genesis will use the additional capital to bring more flexible capacity to the electricity market to address the risk that we currently face of insufficient electricity supply in years when the hydro lakes run low. That is too big a risk to leave unaddressed. This investment will directly contribute to enhancing New Zealand’s energy security.

Perhaps the most important source of resilience for every Kiwi is their physical and mental health. The single biggest item in the Budget, therefore, is support for front-line health services. Next year, Government spending on the health system is expected to total $34 billion. That translates to $17,000 for every New Zealand household. Additional funding of $5.5 billion from Budget 2026 will help the public health system address front-line pressures and deliver more services, including responding to more emergency department events, delivering more primary healthcare, increasing specialist assessments, boosting elective surgery, and increasing cancer treatments and GP visits.

Simeon Brown has been a champion for a number of targeted health initiatives as well, alongside our coalition partners. They include a nationally coordinated specialist paediatric palliative care service for families facing possibly the hardest thing, a boost for ambulance services, more funding for forensic mental health services, and an ongoing funding increase for Pharmac so they can purchase more medicines. The starting age for free bowel screening will be lowered, once again under this Government, from 58 to 56, and mothers, following the passage of our three-day stay bill, will be given the choice of longer postnatal stays. The Health Digital Investment Plan will receive $300 million for priority projects, critically including strengthening cyber-security across New Zealand’s health system.

Budget 2026 also commits $682 million worth of capital funding for investments in our health infrastructure plan. These include the delivery of a new 158-bed ward tower at Whangārei Hospital. They include the next stage of redevelopment work at hospitals in Tauranga, Hawke’s Bay, and Palmerston North. Our infrastructure plan also funds the purchase of land for a future new hospital south of Auckland, and it funds the establishment cost of the new medical school at the University of Waikato and the redevelopment of the Mason Clinic.

The Budget continues this Government’s critical efforts to boost educational achievement. This is good for young people, who will have better opportunities, and it’s good for the economy as a more educated workforce will boost productivity. Budget 2026, therefore, provides a $1.6 billion boost in operating funding for schooling and early childhood education. Schools will receive increases to their operational grants, alongside funding to cover increased employer contributions to their staff’s KiwiSaver accounts. Early childhood education services will receive a boost to their funding rates. There are targeted new investments to support Erica Stanford’s plan to increase the reading, writing, and maths skills of every child, but, most importantly, this Budget invests in secondary education, including measures to strengthen teaching and learning to raise student performance and to roll-out a refreshed secondary curriculum and new national qualifications. We are leaving NCEA behind us.

The Healthy School Lunches programme will continue to offer affordable, nutritious meals to students in 2027, while ongoing work continues to explore future innovations to the programme. Budget 2026 also allocates a significant $470 million package of capital funding to redevelop up to 10 schools, deliver up to 232 additional classrooms, and purchase land for new school sites in high-growth areas, including Queenstown.

This Budget ends the failed Fees Free scheme for students in tertiary education. Fees Free did not increase enrolments, it did not increase completion rates, and it especially failed those from low-income backgrounds. The money from Fees Free will now be put to better use, delivering front-line public services and strengthening our compulsory education system so that more kids get the chance to participate in tertiary qualifications because they have the reading, writing, and maths skills to do so. This Budget takes initiatives to better prepare young people for trades and other vocational education. I want to acknowledge New Zealand First—particularly Minister Jones—for proposing and championing this policy. The Government will double the number of Trades Academy places, from 10,000 to 20,000, for year 11 to 13 school students. That will allow more kids to get on the path to a successful career in the trades—whether it’s building, carpentry, primary industries. We know that trades academies work, and kids who take part in them are more likely to get good jobs. The Government will also provide 1,000 more Youth Guarantee places. These are places for those kids who have missed out on foundational skills at school. They are kids that are more likely to end up in long-term unemployment, and they are kids who need our support. These Youth Guarantee places will provide wraparound support and training for school leavers with no or low qualifications.

The law and order package in this year’s Budget provides a $1.1 billion uplift in operating funding for Corrections, Customs, Police, and the Ministry of Justice to maintain essential front-line services that are keeping our communities safe. This includes funding of $477 million for Corrections to manage an increasing number of prisoners. We are keeping our communities safer by ensuring that those who committee violence against our fellow citizens are sentenced appropriately. The Budget includes a $50 million funding boost for front-line policing and an investment to replace Police’s end-of-life automated biometric identification system. To advance the Government’s firearms reforms, the Budget provides funding to establish a new independent firearms regulator—Firearms Safety and Education New Zealand. Budget 2026 provides capital funding of $100 million towards the construction of a new High Court, District Court, and Māori Land Court in Rotorua. It funds badly needed new police stations in Greymouth and Whanganui. Customs also receives a funding uplift to disrupt transnational, serious, and organised crime groups and to combat drug smuggling.

This Government has a Going for Housing Growth programme to increase the supply of housing and make it more affordable. We’re making progress. The Treasury’s latest assessment is that there will be a relative improvement in the affordability of new dwellings. House prices are now forecast to grow more moderately, rents have stabilised, and first-home buyers now make up a much larger share of the market. The Budget drives forward the next stages of Going for Housing Growth to build on this success. The first pillar of our programme is freeing up land for urban development and removing unnecessary planning barriers through major reform of the Resource Management Act and changes to national direction. Budget 2026 provides $294 million of funding to begin rolling out this new system. This includes a new, centrally managed platform for planning, consenting, and compliance so that things aren’t still done 78 different ways across 78 different councils.

The second pillar of our housing reforms is improving infrastructure funding and financing tools so councils and developers can better fund the pipes, roads, and other infrastructure needed to support growth. The Budget supports this with $30 million of funding for the regulatory oversight of development levies that are charged by territorial authorities and water organisations to ensure those fees are fair on the people who pay them.

The third pillar is directly improving the incentives for councils to support housing growth by ensuring they share in the economic upside that growth creates. The Budget allocates $400 million to achieve this, by establishing a direct funding stream linked to housing growth. This was a commitment in the National-ACT coalition agreement, and it has been championed by Deputy Prime Minister David Seymour.

The Budget also progresses reforms to improve the fairness of housing support for low-income tenants. Right now, people in similar circumstances but living in different houses—one owned by the Government and one not—can receive very different levels of financial support and security of tenure. Budget 2026 includes a package that reduces, but by no means eliminates, that wide gap in support. It increases the amount social housing tenants pay towards their rent from 25 to 30 percent of their income, and, at the same time, it increases maximum accommodation supplement rates across the country so that lower-income private renters get more help. This package is broadly fiscally neutral. It’s about re-balancing support, not reducing it. At the same time, the Government is providing funding to support the delivery of between 1,800 and 2,250 new social homes over three years, with a $69 million boost to the Flexible Housing Fund. The Budget also continues our efforts to reduce dependency on emergency housing, which was a scourge under the last Government. It includes $22 million invested to reduce reoccurring emerging housing needs. This initiative will more than pay for itself through savings in otherwise costly motel bills.

This Budget boosts funding to support New Zealanders in need. Budget forecasts show several thousand fewer New Zealanders on jobseeker support and sole parent support benefits in the coming years. That is a great thing, and it is part of a deliberate effort by this Government. Our Budget includes funding of $93 million for additional case management and assistance to support sole parents into work. That is the upfront cost, but the initiative is expected to deliver net savings of $97 million as more sole parents move from receiving a benefit to having a job. That is good for those mums and dads, and it great for their kids and their future prospects. The Government is also reducing the maximum rate of temporary additional support payments, generating $196 million worth of savings. This is to better reflect the original purpose of those payments—before the last Government expanded them—which was to provide temporary hardship support, paid as a last resort and not meant to be a long-term top-up to beneficiaries’ incomes. The Budget also provides ongoing funding for the Food Secure Communities programme and the KickStart Breakfast programme—we’ve fixed up another one of their fiscal cliffs—and it delivers a step-up in investment to better protect children at risk of harm.

In 2022, Dame Karen Poutasi issued a compelling report with a series of recommendations to the Government on steps it must take to ensure strong and effective safety nets that prevent the abuse and the death of children. Far too many children are still abused in this country, and as parliamentarians we have a responsibility to protect them more. While that report had remained on a shelf, our Government has picked up each and every one of Dame Karen’s recommendations, and this year’s Budget invests $77 million to help make the changes needed to our system of helping vulnerable children. Alongside this, Oranga Tamariki will receive a $184 million funding uplift so it can better respond to reports of suspected harm and increase its support for children with high and complex needs.

Finally, Budget 2026 provides funding of $36 million to introduce a version of the SuperGold card that can be used as an accepted form of primary identification. This will help seniors access services that require identification when they may not have a driver’s licence or passport—and I think you know where that idea came from.

Over the last year, Inland Revenue has consulted widely on the taxation of charities and not-for-profits, fringe benefit tax, and loans made by companies to their shareholders. The Government has made decisions in each of these areas. We will ensure that membership subscriptions and levies received by not-for-profits remain non-taxable. We will ensure that the amount of net income a not-for-profit organisation can earn without having to pay tax from $1,000 to $10,000, and we will ensure that the donation tax credit scheme remains financially sustainable, and limits tax planning risks, by capping eligible donations at $100,000 a year.

On fringe benefit tax, the Government is simplifying the rules for private motor vehicle use. Small business—we’ve heard you. We’re going to make it simpler. There will no longer be a requirement for detailed logbooks. Instead, a “close enough is good enough” approach will significantly reduce compliance costs for businesses. Another change will ensure that six months after a company has been removed from the Companies Register, any outstanding loans it previously made to its shareholders will be taxed as income.

Finally, the Government is introducing a new prudential levy on banks, non-bank deposit takers, insurers, and some other financial institutions, to cover the costs of prudential regulation and supervision. Such a levy is consistent with other jurisdictions, including Australia and the UK, and is also consistent with the approach we take to levies imposed by other New Zealand financial regulators. It is expected to recover revenue of $209 million over the forecast period.

In closing, while I have the pleasure of delivering this speech, the Budget is 100 percent a team effort. It reflects the efforts, late nights, and extraordinary skills of talented New Zealanders, including those in the Public Service and in Ministerial offices. Most importantly, the Budget reflects and demonstrates what it is to deliver strong, stable government.

The Budget Ministers team includes Associate Finance Ministers David Seymour, Shane Jones, and Chris Bishop. Each represents a different political party, but each came to this Budget with a focus on responsible management of the Government’s finances. Together, we have worked through the difficult choices and trade-offs that a Budget always entails. Where we have disagreed, we have done so agreeably and with respect, and no matter the challenge, we’ve always found a way through. The ultimate result, I think, gentlemen, is a Budget we can all be proud of.

I also want to thank the Prime Minister for his consistent support, for his wise counsel, and for his enduring belief in the potential of this great country of ours, New Zealand.

Finally, Mr Speaker, please let me acknowledge the support of my own family who are watching from the gallery today: my Mum and Dad, my brother and sister, their spouses, my husband, and our four children. James, Harriet, Reuben, and Gloria, I know I’m not home enough; I work hard, and I hope to make you proud.

New Zealand has a great future ahead of it. The Government’s disciplined management means Kiwis can look forward to a growing economy, effective front-line public services, and increased investment in the things that really matter. We can have all of that and a strong set of books too. Thanks to our care with public money, the Government’s books will return to surplus a year earlier than previously expected. But none of this, colleagues and none of this, members, can be taken for granted. Delivering these results requires New Zealand to stay the course. Now is not the time for promises of reckless spending and big new taxes. This Budget shows that the Government’s programme over the last 2½ years is making a difference. We are securing the future, and Kiwis can look forward with confidence. They just need to choose it; they just need to vote for it. I commend this Budget to the House.

The question is that the motion be agreed to.

14:46

I move, That all of the words after “That” be replaced with “this House has no confidence in the Government because after promising to grow the economy, it has shrunk it; after promising to get Kiwis back to work, it is presiding over record job losses; after promising to fix public services, it has gutted our public health system; after promising to fix the cost of living, it has made it worse; and after promising New Zealanders relief, it is prioritising corporate interests over the interests of everyday New Zealanders.”

This Budget was the Government’s last chance. It was their last chance to show New Zealanders that they actually get it, that they understand that it’s really tough going out there for New Zealand families. The backbench in the National Party are waving goodbye already! [Gestures at members leaving Chamber] They’re already giving up. Don’t be so pessimistic—there’s still about 163 days to go! It was their last chance to show New Zealanders that they get it, that they feel the pain that New Zealanders are under, and they have failed to do that. Kiwi families will be asking themselves one question after this Budget: are they feeling better off today than they were three years ago? For the vast bulk of New Zealand families, the answer to that is categorically no.

This Government is asking those with the least to sacrifice the most. They are taking from the poor to give to the poor. Robin Hood would not be proud of this Budget. They are asking those who have the least, those who are the most disadvantaged to make the biggest sacrifices in this year’s Budget. They are desperately trying to create the illusion of progress, using smoke and mirrors, while Kiwis continue to go backwards. There will be no spinning their way out of the tangled web that they have created, that has seen Kiwi families facing tougher and tougher times.

This is a Government that said they were going to fix the cost of living, and the cost of living has never been higher. It is a Government that said they were going to get Kiwis back to work, and yet unemployment is continuing to grow, and this Budget shows that it is getting worse. It is a Government that promised to support businesses, and yet company liquidations are at recent highs under this Government. Unemployment is staying higher for longer.

Claims by Nicola Willis that the Government is getting the books back into surplus a year earlier than previously forecast neglects the fact that that’s still two years later than it was before she got her hands on the Government’s books. This Government took everything backward. New Zealanders can go back and they can see what was forecast before the last election, and they can compare this Government’s track record with what the Treasury was predicting then. It will show the books are taking longer to get back to surplus, Government debt is going to be higher, unemployment is going to be higher, the economy is going to be smaller, and the going for Kiwi families is going to be tougher. That is the legacy of this Government. Higher inflation, lower economic growth, higher unemployment, higher debt—that is what National leaves New Zealand. Forty thousand fewer people in jobs today than there were when National became the Government—that is their track record; business liquidations at a 15-year high.

Twenty thousand jobs have been lost in the building and construction sector—this, from a Government that said they wanted more hard hats and fewer lanyards down Lambton Quay. Well, the people in hard hats had their jobs taken away by this Government, who decided to pause everything, review everything, cancel everything, and it is the people on the front lines doing the work who found their jobs disappeared as a result of those decisions. As the economy recovers and as the Government goes out there about the country touting the infrastructure projects that they want to spend money on, the question is: who’s going to do that work? A lot of those 20,000 building and construction workers have given up and left the country. They went across the Ditch to a country that would actually give them jobs, because this Government took their jobs away. Record numbers of Kiwis have been leaving the country—young New Zealanders just giving up on this Government and voting with their feet, because they do not see a future under a Government that is simply offering more pain, higher costs, and more cuts.

National promised to fix things, and instead, they’ve made them worse. This is a Government that’s failing. It’s failing on growth, it’s failing on job creation, it’s failing on the cost of living, and this isn’t happening by accident. These are the consequences of the choices that this Government has made—their choices that see families facing higher bills every day. The cost of going to the supermarket has never been higher. The cost of going to the petrol station has never been higher. The cost of paying the rent has never been higher, despite the promises of this Government. The power bill that Kiwis pay has never been higher—20 percent higher, in fact, than when this Government took office.

So many families are having to make so many tough decisions. This Government doesn’t understand those families who are sitting around the dining room table every night and trying to figure out how on earth they are going to make things add up, how on earth they’re going to deal with that sudden one-off unexpected expense that they face—the car that breaks down and sits in the driveway because they can’t afford to get it fixed; the kid that needs to go to an orthodontist but can’t because their parents can’t afford it. These are the decisions that Kiwi families are making every single day, and this Government is offering them nothing. This Government does not see them, it does not hear them, and it does not care about them.

The Kiwis who are doing everything right, who are working harder, longer hours than ever, and yet they have less at the end of the week to show for their own hard work—their wages being squeezed, their bills continuing to go higher, and tens of thousands of them simply giving up because they don’t see their future here in New Zealand. [Interruption]

I’d just remind Government members to read 141 of Speakers’ Rulings—141/3.

Nicola Willis painted a very rosy picture of the country today. It’s not a picture most New Zealanders would recognise. Those who are struggling, those who don’t know whether they’re still going to have a job in a couple of weeks or a couple of months, they won’t recognise the country that Nicola Willis and Christopher Luxon and Winston Peters and David Seymour think that we live in. They simply won’t recognise that country, because it is not their reality. This Government lives in a different reality to what most New Zealanders face on a day-to-day basis.

Nicola Willis called this a “tough love” Budget. There was no love in this Budget—there was no love at all. There were more cuts, more pain, and higher costs—a Government that’s built its Budget on cutting the jobs of others and celebrates that. They’re real people with families and homes and mortgages and kids to support, and this Government is celebrating cutting thousands of their jobs. They see those as just numbers to be shifted around to make their own balance sheets add up. They are real people, and they are being forgotten by this Government. In fact, they are being treated with contempt by this Government—cutting jobs, cutting services, kicking people out of their homes, hoping that nobody notices the consequences of the decisions that this Government is making.

Sacking 9,000 New Zealanders—the social workers who work with our most vulnerable families; the Department of Conservation (DOC) rangers who preserve and protect our conservation estate. Our tourism industry, by the way, is based on our clean, green reputation—a lot of tourists come here for our clean, green conservation estate—and this Government wants to cut the very foundations of that in this Budget. Hundreds of millions are being cut from DOC. We’ve seen what happens when that was done by previous National Governments. It doesn’t end well.

Customs officers being cut in this year’s Budget—those who protect our biosecurity. Our farmers rely on our biosecurity that’s being cut. Members on that side of the House like to say they’re pro-farmers. How pro-farmer are they going to be when foot-and-mouth arrives in New Zealand because of the cuts they are making to our biosecurity? This Government is cutting funding for biosecurity at a time when it has never been more important. At a time when the risks to our primary sector have never been greater, this Government are cutting the very protection that that entire sector relies on.

People who rely on superannuation are finding those who process their superannuation having their jobs cut. Cuts don’t grow the economy; they shrink it. If you sack a social worker, you don’t just lose a social worker; you lose the wages that would have previously been spent in the local cafe, in the local supermarket, with the local tradies. It has a downward spiralling effect, and that is what we have seen from this Government. When people lose their jobs—

Have a cup of tea.

No, that’s enough.

—businesses lose their customers. My message to Nicola Willis is very clear: businesses in Wellington aren’t struggling because people are working from home; they’re struggling because those people are losing their jobs, and the ones that still have them don’t know whether they’re going to be keeping them.

It is not just here in Wellington. Half of the jobs on the chopping block now are outside of Wellington—20 percent of those in Auckland, where the number of people without work has already doubled under this Government. Auckland is our biggest city, and yet the number of people without jobs in Auckland has doubled in the last three years under this Government’s watch.

This Government say they want to get people back into work, and yet across the country, people are seeing the consequences of their choices. In regional and provincial New Zealand, many of the jobs in those communities are also on the chopping block. Our customs officers work in every port across the country, not just those in Wellington. They work in every part of the conservation estate, which, by the way, is mostly spread across provincial New Zealand. Those are the jobs that are now on the chopping block, and every local community will feel the consequences of those jobs being lost.

If you want to see how much this Budget relies on smoke and mirrors, just look no further than the Ministry of Foreign Affairs and Trade, where, on the one hand, Nicola Willis is giving them some extra money, and then you go a few pages ahead and you’ll find that almost exactly the same amount of money—in fact, slightly more—is being cut again. Yet Winston Peters says, “Oh, those cuts aren’t going to happen.” Well, there’s the first big hole in the Government’s Budget already, because there are literally hundreds of millions of dollars in cuts to the Ministry of Foreign Affairs and Trade reflected in this Budget that the Minister of Foreign Affairs has already said are never going to happen.

This whole Budget is based on the notion that there are all of these cuts that the Government is going to make, and yet, one by one, you watch as those Government Ministers say, “Oh, but it won’t be this and it won’t be that and it won’t be this and it won’t be that.” Then suddenly that surplus, that mega-thin surplus that Nicola Willis promises, will disappear in a heartbeat, because this Government’s Budget is based solely on smoke and mirrors, while New Zealanders continue to go backwards.

Let’s look at those cuts from the poor to give to the poor that we’ve already seen announced a few days ago—those most vulnerable New Zealanders who live in State housing. It may escape this Government’s attention, but it’s damn hard to get into a State house already. We deal with so many people through our electorate offices who struggle to get into State housing. I have sat down with many of those people, where they have brought their bank statements in in tears, asking “What am I supposed to do?” Many of them don’t live nice, neat, tidy lives. Their lives are difficult; their lives are complicated. This Government simply turns its back on them.

The 30,000-odd pensioners—I’m staggered that Winston Peters agreed to increase the rent for 30,000 pensioners, but there you go—30,000 pensioners who simply don’t have an extra 30 bucks left over at the end of the week to pay increased rent. Those with disabilities who have already seen savage cuts under this Government to the supports they rely on are now facing their rent going up at a time when they can least afford it. This Government has turned their backs on those very people. There are people who struggle every single day to make things add up, and this Government simply don’t care.

They want to make it easier to boot people out of State housing. When I saw that, I thought of a very recent case of someone who was living in a State house with a relative who passed away. The relative who passed away was the person whose name was on the tenancy. That person was given a matter of days before they had to find somewhere else to live. That person also had complex needs. That person was also in dire straits, dealing with the grief of losing a relative and facing the prospect of being turfed out on the street. You don’t solve homelessness by booting people out of State housing. In fact, we’ve now got record numbers of people living rough on the streets under this Government’s watch, because they are boasting about ending emergency accommodation and boasting about booting people out of State houses, thinking that people won’t notice.

What’s their solution to that? It should be to build more houses. It should be to find those people a roof over their head. Instead, it’s move-on orders—out of sight, out of mind. Just pretend those people don’t exist. Boot them out on to the street, keep them away from the public, and pretend that they don’t exist—literally pretend that the most vulnerable in our society simply don’t exist. That is what this Government think the solution to homelessness is, and it is absolutely shameful.

When businesses close, when families lose income, when kids lose opportunities, the entire country suffers as a result of that, and yet jobs in this Government’s Budget have not been a focus. The only focus in this Government’s Budget around jobs is how many of them they’re going to cut, not how many could be created, and yet that is exactly what this Government should have been focusing on: making sure that we can get New Zealanders back to work. Instead, they are whacking the most vulnerable. They are whacking the people who can least afford it. The people whose budgets already won’t stretch any further are suddenly being told they have to make more sacrifice, they have to find more, so that this Government can create the illusion of a Budget surplus—pushing more costs into the future, pushing more on to the future generations of New Zealanders, providing less hope for younger New Zealanders. That is only going to exacerbate one thing, and that is the number of young Kiwis who end up leaving the country.

In health, we see band-aids, not prevention. In education, we once again see some of the most vulnerable kids in our schools and in our education system being completely ignored by this Government. Think of the home-school parents who were out front yesterday, who this Government have absolutely done over in the last few weeks. Some of those parents deal with some of the most complex kids in our education system—kids with disabilities, kids with high behavioural needs, being treated with absolute contempt by this Government. Don’t let the parties opposite try and tell you that they saved the day, because they voted just this week in favour of the changes they suddenly did an about-face on. They did not care about those people, and nor does this Government,

What can we expect to see out and about in New Zealand as a result of this Government’s Budget? More people losing their jobs; more shops closing; more businesses losing revenue; more local economies slowing down; more decay on the main street, with boarded-up shop front windows; more decline; and more people giving up and leaving the country. That is the legacy that this Government will be leaving for New Zealand, and it didn’t have to be this way.

Instead of a plan for the future, New Zealanders have been offered nothing but excuses and blame by this Government. On a credible plan for growth—remember about “Growth, growth, growth”? Everything was going to be “all about growth”—right before they shrunk the economy. No credible plan for economic growth. On cost of living relief: no plan on cost of living. On detail around who’s going to actually lose their jobs and which public servants are going to face the chop: not much detail there, either, just everybody now living with a dagger hanging over their head, still waiting to find out whether they are going to have a job.

Three years, three Budgets: more cuts, more pain, and higher costs. It did not need to be this way. All Governments have choices. What did this Government choose? Tax cuts for tobacco companies, tax cuts for landlords, tax cuts for multinational tech giants like Facebook and Google—not support for New Zealanders who are struggling. More support for the fossil fuel industry. Subsidies for the fossil fuel industry have been this Government’s plan to deal with the energy in New Zealand—not a plan that’s actually going to lower household electricity bills.

This was the Government’s last chance. It was their last chance to show New Zealanders that they had a plan to create jobs, that they had a plan to lift New Zealand out of the situation that we are in at the moment. They have failed on every measure. At a time when New Zealanders are so desperate for hope, when they are looking for something to get excited about, this Government’s Budget has offered them none of those things. New Zealand is going backwards under this Government. The clear question every Kiwi family is asking themselves is: are they better off than they were three years ago? The answer is no. So, my message to the members opposite: enjoy the leather benches for 163 days more, because your time is done.

Point of order, Mr Speaker.

I’ll call the member, but I’ll just suggest that the whole House needs to be mindful of Speaker’s ruling 143/3, and if you’re uncertain, have a look at it and decide how to carry on from here. The Rt Hon Winston Peters.

Because New Zealanders need to hear much more of this, I move an extension of time to the last speaker.

Well, as you know, you can’t seek leave on behalf of someone else. The question is that the amendment be agreed to.

15:08

I speak, I think, on behalf of everyone in the coalition Government when I say I would rather face 100 duck-sized horses than sit through another speech as woeful as that from the Leader of the Opposition. I have to say, I haven’t seen Labour MPs struggle that much to get through something since Ayesha Verrall took up singing. I think Chris Hipkins went to bed last night, he put on the Spider-Man pyjamas, and he woke up this morning thinking he’d be a great left-wing hero, and all we got was the same old negativity—that constant, relentless, joyless talking down of New Zealand that we’ve come to expect from the Labour Party.

I’ll ask you, what didn’t we get? What we didn’t get was policy. We didn’t get a single credible policy—not one. I have to say, I think it’s very clear and obvious now that, officially speaking, the 2026 Labour Party are the laziest Opposition in the history of New Zealand, because all they’re doing is doing some TikToks and some singing about ducks, for God’s sake. I think, for the sake of the grim-faced members opposite, I truly do hope that Kieran McAnulty does a much better job of that speech next year, because the bar, frankly, couldn’t be lower.

I’ve always said you can judge a party by the contradictions, and on that measure, Labour is world class, aren’t they? On the one hand, they ban oil and gas, and then they complain when manufacturers can’t afford the energy. They then oppose mining—but, actually, they complain when Kiwis move to Australia to take up mining jobs. They want renewable energy, and then they vote against every single measure to actually deliver it. They like to claim—yeah, they claim that we backed the rich, because we gave working Kiwis tax relief, when they make cleaners and retail workers pay off university fees for millionaires’ kids.

Then they bang on about the cost of living while plotting a capital gains tax that you know is going to hit every farmer, every small-business owner—every Kiwi who’s ever worked hard and invested in their future. At the end of the day, I’m telling you—I’m telling you—the Labour Party only has one idea—one idea. They’ve had it for years, and they’re sticking with it, and it is, quite simply: spend more, tax more, borrow more—that’s it. That’s the whole kit and caboodle, that’s the whole plan, that’s the whole document, the complete policy platform of His Majesty’s loyal Opposition. That is it.

I’ve got to say, they have a spending addiction that is so fierce it’s going to make a Vegas poker machine blush. It’s really that bad. They want to spend money that they don’t have on things that we can’t afford, funded by recklessly borrowing against our children’s future. That’s what they’re doing—that’s exactly what they’re doing. When the bill comes, they’re going to come after your money. They’re going to come after your income, your savings, your business, your home. That’s what it’s going to be about.

If you ask them, how are they going to pay for just one of these sort of hair-brained policies they’ve had called the Future Fund—did you hear it the other day? Barbara Edmonds said, oh, she can’t give us any detail on the Future Fund because of the Treaty. I think even worse was actually Chris Hipkins, who said they can’t give you any details because Kiwis just don’t care. That’s a pretty pessimistic view of the world. I’ve heard about Rogernomics, but I think what the Labour Party is now running on is “Don’t-care-onomics”. That’s what it’s about—it’s called “Don’t-care-onomics”. They want to spend more, borrow more, tax more, and if anyone asks any questions, you just shrug and say Kiwis don’t care. I’m telling you, if you challenge them any further, they’ll just say it’s a Treaty breach—that’s what it’s all about. That’s not acceptable.

First, they’re going to tax your house, then they’re going to tax your business, then they’re going to tax your KiwiSaver, and then everything else. Their message is really simple—their message to Kiwis is really simple—it says: if you’re successful, you need to be punished. That’s, essentially, the message that they are giving us here today. I’m telling you, there is not an ambition or an aspiration in this country that Chris Hipkins doesn’t want to actually stifle and not a success that wants to trample all over. This is without doubt no longer the party of Helen Clark and Michael Cullen; this is the party of “Don’t-care-onomics”.

But enough of Labour, because another year, another outstanding Budget from the great Nicola Willis. Aren’t we lucky, in difficult times—really challenging times—that we have such a diligent, thoughtful, smart, courageous Minister of Finance determined to make New Zealand a better place. In a year of global volatility—in a year of fuel crises and economic headwinds that no one could have predicted—she has once again delivered a Budget that is responsible, it’s ambitious, and it’s laser-focused—laser-focused—on the future of this country. In a third year, she’s knocked it out of the park, and I want to say to Nicola Willis on behalf of every New Zealander who’s now experiencing lower inflation and lower interest rates, we owe you a big debt—thank you very much.

On this side of the House, we’ve been busy. We’ve been busy working on behalf of every Kiwi to secure New Zealand’s future—not spending more, not borrowing more, not taxing more; delivering more. That’s what it’s about. If the Leader of the Opposition’s speech couldn’t wake the members opposite up, they should just stop quacking and pay attention for a little bit, because here’s the key things they need to know: average economic growth at 2.7 percent per year. That is faster growth this year and next year, and the year after that, than Australia, the UK, EU, and Japan. Just let that sink in a little bit. Pay attention: 220,000 new jobs being created—how good is that? Wages growing faster than inflation, and that’s how Kiwis actually get ahead so they can actually do more with their hard-earned cash. We know on this side, widening the gap between wages and prices is the key to making life more affordable for Kiwis, not random cost of living payments to dead backpackers and French people, basically.

I know the members love to talk up other countries and talk down New Zealand, and you heard it again today, but here are the facts—and they’re not going to like hearing this, and sometimes the media doesn’t like hearing this either: March saw the second-lowest number of Kiwis leave in any month since January 2023. If you just take the last year, the past year that we’ve just gone through, 9 percent more Kiwis have come home and 6 percent fewer Kiwis have left New Zealand. That is funny how that doesn’t make any of their press releases or media stories.

This Government’s mission from day one has been simply: fixing the basics and building the future. Fixing the basics that Labour broke—the economy, the cost of living, law and order, and all the public services that Kiwis rely on—and building the future by investing in infrastructure and education and defence and energy security and the trade relationships that are going to determine New Zealand’s prosperity for decades to come.

We know the past few years have been incredibly difficult for Kiwis: shock after shock after shock. We’ve had COVID, we’ve had Labour’s high inflation and recession, extreme weather events, Trump’s tariffs, and now we’ve got a fuel crisis with its origins in the Middle East. That’s why this Budget also includes temporary, targeted, and timely support for households facing pressure from the fuel crisis—the $50 a week in the in-work tax credit and an increase in mileage rates for support workers and for those travelling for specialist treatment.

It's a volatile and uncertain world, and it demands a Government that understands national security in all of its dimensions: economic security, financial security, energy security, international security. The bottom line is you don’t get prosperity without security, and you don’t have security without prosperity, because the two are interdependent and linked. That has been the logic behind Budget 2026, and it’s a logic you simply don’t hear from the members opposite, because they have no strategy, they have no plan, and they have no ideas—just songs about ducks and bottomless wish lists, and absolutely no way to pay for it except coming after your money.

I just want to talk about the numbers, because without fiscal discipline, we can’t have anything else. It’s as simple as that. Every dollar we spend servicing debt is a dollar that we don’t get to spend on schools and hospitals. It’s that simple—a simple fact as true for a Government as is for Kiwi households up and down this country, and one that has apparently never ever even crossed the minds of the members opposite in this House today. Their approach is pretty simple: if you run out of money, just borrow money. If your borrowing gets embarrassing, just tax some more. If anyone dares to point out that spending more, taxing more, and borrowing is not actually an economic strategy, well, just remember, Kiwis don’t care. That’s what it’s about.

Well, we care, and New Zealand’s future depends on us caring. Across three Budgets, this Government has found $50 billion in savings and we have returned that investment to where it belongs—out there on the front line in schools, hospitals, police, cancer drugs, hip and knee replacements. I’m very pleased to confirm we are forecasting to borrow $6 billion less in this year’s Budget than we were in December and that we remain on track for that surplus in 2028-29—a year earlier than previously forecast. For the third year in a row, we have achieved significant savings across Government, and that’s what it looks like when you’re actually fixing the basics.

Let me give you just one example, and that was that it was costing Labour $1.2 million to build a classroom in New Zealand. We standardised the design, we halved the cost, and now we can build twice as many classrooms for the same amount of money that Labour actually had. That’s not austerity; that’s called competence. That’s called delivery and knowing how to get things done, and that’s what this Government does—that’s exactly what we are all about. Let’s not forget the tax relief that we delivered in 2024, delivering on average about $5,500 to an average household that would be worse off today without that package of help and support. And yet, disgracefully, for parties that purport to be about working New Zealanders, every single one of those members didn’t support that single initiative—every single one of them—because their instinct is “We want to spend more, tax more, borrow more, and it’s your money that we’re going to go spend.”

While we stay disciplined on operating spending, the recent fuel crisis has reminded us that we need significant capital investment to build the future, too. Modern, reliable infrastructure; a defence force that is fighting fit; the schools and the hospitals that Kiwis rely on—this is what building the future actually looks like, not a TikTok, not a press release, and definitely not a song about ducks.

This year’s net capital package is $5.7 billion—and, yes, that’s larger than we planned, but don’t take it as a signal of permanently higher borrowing, but as a deliberate, targeted investment in resilience. Roads of national significance are under way: Hawke’s Bay Expressway, Ōtaki to north of Levin, Warkworth to Te Hana. This Budget adds Cambridge to Piarere, completing the Waikato Expressway—and you know the roads that Labour’s cancelled, well, we’re now building them. We’re also building the schools and the hospitals and the courthouses and the police stations in a considered way that gives certainty to business and to the tradies and builders we want staying here in New Zealand.

Now, if you can’t produce abundant, affordable energy independently, you do not have a national security. You do not have economic security, full stop. It’s that simple. New Zealand’s strategic energy vulnerability is no longer theoretical. We see it every day in the Strait of Hormuz, and our Kiwis are experiencing it at the pump and on the factory floors up and down this country. But I’m telling you: the oil and gas ban was the most economically reckless decision ever—ever—made from a New Zealand Government. It was a disaster for working people. It was a disaster for manufacturers. It was a disaster for energy security. It was “don’t-care-onomics” in action, a feel-good decision made without thought to the real cost to real Kiwis. If there’s just one thing that Labour and Green MPs could do to help Kiwis, it would be to drop their commitment to reintroduce that ban. Just one thing. Do one thing. But I’m telling you they’re not going to do it because they’d sooner be on the right side of a Labour Party dinner party than they would be actually on the right side of the Whakatāne Mill dealing with their energy bill.

I want say a challenge to the members opposite from Labour, the Greens, and Te Pāti Māori, because when you’re going to head out into regional New Zealand for the first time since the last election to try and make the case for why people should vote for you, you need to be real straight with them. You need to be straight about the failed policies of that last Government and what that did to our manufacturing sector. You need to be straight with them about the fact that the livelihoods of working people were sacrificed in exchange for a nice headline about banning oil and gas, and you can’t say you care about the cost of living and working people unless you’re serious about energy security.

We are taking actions to build strategic coal reserves, $90 million worth of extra diesel at Marsden Point. Is it costly? Yes. Is it less costly than the alternative? Absolutely, and this Budget certainly builds on big commitments into energy. I want to be extremely clear that going forward from this point in New Zealand, our energy independence must be treated as a national security action instead of an agenda about contributing to long-term climate strategy. The bottom line is we are never going to compete in a globally technological world without abundant affordable energy. As we keep saying, we’re going to prioritise the solar farm over the skink each and every day.

Now, I can talk about health because we are fixing the basics of what New Zealanders get from their health system. This Budget delivers three-day postnatal stays, paediatric palliative care, expanded bowel screening, and a new hospital block in Whangārei. Thank you, Shane Reti. When a dollar doesn’t go into growing the bureaucracy—which is the only thing that grew under Labour, let’s be honest about it—it goes to what actually makes a difference to people across this great country.

It didn’t get much pickup but there was a really excellent piece by Harriet Laughton in The Post which uncovered more detail on Labour’s GP policy, and I don’t think Labour really wants us to know too much about it. But do you know you won’t actually be allowed to choose whether you see a GP or not. No? The Labour Government will decide that. Their plan is that you’re going to ring them up, tell them what’s going on, and then they’re going to decide if you’re actually allowed to go to a doctor’s appointment. I think if you’ve paid any attention over the last 10 years to how Labour manages big projects, I just don’t think setting up a call centre to triage 26 million GP visits a year is a good idea. I actually think it will go as well as last weekend’s list ranking meeting that they had. I think the only other thing they didn’t tell us was that, actually, when you ring up, they’re going to thin out that call line queue even further because Ayesha Verrall is going to be singing that duck song again.

We are also fixing the basics in education. Cellphones are banned; kids are learning an hour a day of reading, maths, and writing; we’ve got structured literacy, structured numeracy, standardised reporting, a brand-new curriculum, a replacement for NCEA. I’m telling you, it’s working. Our kids are going to school in greater numbers. Thank you, David Seymour. Our maths acceleration programmes are working and we’re seeing big improvements amongst our year 6 students in particular. You know who was in charge in that damaging decline? It was the Labour Government. It was Chris Hipkins who was the Minister of Education for 5½ years, and they were just too busy spending more, borrowing more, taxing more than worrying about what was going on with our kids and why they were falling behind.

I saw a really insightful story the other day involving Ginny Andersen. It was in the Herald, and it was her views on education. What she said is there are some ideological differences between National and Labour on what our kids should be learning. An example she gave was, and I quote, “If you’re waiting for the bus and it doesn’t arrive, and you can tell it’s 22 minutes late, what are you going to do now?” Now, I’ve got to tell you, if her time as a police Minister is anything to go by—and God help us if she ever ended up running education—I think the answer would be something like, “If the bus is late, just steal a car and drive it into a vape shop.” I mean, that’s basically, I think, what we would be getting. We are investing in education. We have got more teacher training. We’ve got 232 new classrooms. We’re doubling the number of trades academies out to 20,000 kids. Because to build the future, you need builders, you need roofers, you need plumbers, you need sparkies, and this Government backs them.

Finally, I want to talk about law and order because we are securing our communities and that’s another basic that we’ve had to fix. Three strikes restored, gang pitches banned, youth crime cracked, stalking criminalised, and more police on the beat. The result: 49,000 fewer victims of serious violent crime, 22 percent reduction in youth offending. But any victim is one victim too many, and so the work continues. The work carries on, and that’s why we’re investing more in police and corrections to manage prison growth, because, to be honest, it shouldn’t be controversial to say that criminals belong in prison, not out on our streets. On that side of the House, they believe in repealing three strikes, they believe in abolishing prisons and defunding the police. But I’ve got to tell you, on this side of the House, we have a coalition Government, it is the Government of law and order, and we believe the rights of victims come ahead of the rights of offenders each and every day. We make no apology for that.

This is a Budget that is honest about the world that we face and clear-eyed about what it takes to succeed in it. There are politicians in this House who think that the answer to each and every problem is quite simply to spend more, tax more, borrow more. They think spending your way out of a cost of living crisis, borrowing your way through a fuel shock, taxing your way to growth. Well, I’m telling you, it’s not a plan, it’s an addiction, and like all addiction, it feels fine until the bill arrives—and the bill always arrives.

You will not find those politicians in the National Party. This is a Government that came here with a mission—fixing the basics, building the future, and three years in, this is exactly what we are doing. We are fixing the basics of the economy—inflation down, interest rates down, growth up, wages rising. We are fixing the basics of law and order. We are fixing the basics of how we teach our kids to read, write, and add up. We are fixing the basics of our energy security, our fiscal position, and our place in the world. We are building the future in roads, in hospitals, in classrooms, in defence, in trade relationships with India and Singapore and the wider Indo-Pacific, in renewable energy projects now coming out of the ground, in the young Kiwis who are staying home, who are coming home, and are building their lives here.

I’ve said it before, but our inheritance from what I call the “Greatest Generation”—those who built the peace after World War II and the rules-based order that followed—is not guaranteed. As I’ve said before, it must be chosen. It must be worked for by every generation. Budget 2026 makes that choice. It’s a responsible choice, a courageous choice, a choice to secure our future, not by spending more, borrowing more, and taxing more, but by building something that lasts. I commend Budget 2026 to the House. We are fixing the basics and building the future to secure New Zealand’s future.

Chlöe Swarbrick. [Interruption] Right, that is a completely unacceptable outburst. I’ve called attention to Speakers’ ruling 141, so people can expect that there will be some consequence for abusing that. Chlöe Swarbrick.

15:29

The Greens want every New Zealander to feel proud of our country. Not just for our history, for granting women the right to vote, standing against the United States for a nuclear-free Pacific, splitting the atom—we want New Zealanders to feel proud of our country that they live in today. We want New Zealanders to be able to swim in their rivers, to be able to grow food in healthy soil, to catch abundant fish from our ocean to feed their families, to be able to afford their groceries, to be housed, to heat their homes, to have the right to a good education and a secure job, to innovate, to create, to have fun.

We want New Zealanders to be happy, healthy, and safe—unified. But this Government is telling us, “Computer says no.” Today, they have released a Budget which tells us that they have no hope, no plan, no ambition, and no vision for this country—unless, of course, that hope, that vision, and that plan is just what we see here: allowing corporations to profit handsomely off the misery off regular New Zealanders; subsidising and supporting the very fossil fuels that Treasury’s Budget Economic and Fiscal Update tells us are the major vulnerability in our economy. This is not a cost of living crisis; it is a cost of greed crisis.

Christopher Luxon and Nicola Willis: aren’t you sick of pretending—pretending that there is no money? The National Party can find money when it wants to. I’m not just talking about their rich-lister donations. In the last two years, they have found billions in their Budgets—in the tax cuts for landlords, tobacco companies, and the wealthy and sorted. There have been billions for fossil fuel production—billions and billions to meet Trump’s request to spend up large on new military equipment. They’ve taken billions and billions from the poorest New Zealanders, cutting access for the homeless to emergency housing and cutting access to benefits, while thousands of New Zealanders are being pushed out of their jobs by this same Government, to the highest number since 1994, the year that I was born.

The books today show us that unemployment will in fact be higher in the next few years, as a result of the decisions that this Government was just clapping for, than were forecast in December. That means another 6,500 New Zealanders will lose their jobs thanks to the decisions of Christopher Luxon. These books show us that Christopher Luxon’s responsible fiscal management has resulted in further downward revisions of GDP growth forecasts.

Treasury today has also warned that his obsession with fossil fuels will raise costs for households and for businesses, which can slow spending, investment, and the very growth that they love to crow about, ultimately reshaping our economy’s structure and lowering our output and economic performance. It’s dressed up in a heck of a lot of fancy language, but today the Government is, effectively, choosing where our collective resources will go and who gets to be in charge of this country, who really gets to make decisions.

Throughout this week, Christopher Luxon has shown us, albeit being dragged kicking and screaming into broad daylight, as to who he sees it is his job to serve. We have seen laws stripping people’s rights to hold big polluters accountable, originally actually drafted by the country’s largest polluters, Fonterra and Z Energy, introduced by this Government with glee. The Greens have exposed that the Government is taking on an extra $1.5 billion more in debt in order to try and quietly cover the tracks of their failed climate policies. This is why it is so important to understand that every time that this Government makes decisions to push more of our country’s wealth up to the top, they are also damaging our democracy. Fewer and fewer people get less and less money and less and less influence, while more and more people are being left with scraps that they are being told to fight over. Those regular people are being told to not look up.

Let’s run through some important facts, because despite this Government’s best efforts to starve our economy, New Zealanders are slugging away and working hard, and we have been lucky with global commodity prices. Our economy is growing in size, but more and more people are getting poorer and poorer, and the Government is cutting away investment in our basic collectively owned and operated public services. Our economy is growing, but regular people are getting poorer, and our Government is shrinking while taking on more debt.

Where is New Zealanders’ money going? Well, just last year, the 100-odd households on the NBR’s rich list increased their wealth by almost $8 billion in one year. Supermarkets are making a million dollars a day in documented excess profit. Power companies’ net profits were $457 million in just the second half of last year. Banks raked in profits of almost $7 billion in 2025. That is $1,248 in profit for Australian banks, for every single New Zealander. But our economy is worth $445 billion. It’s actually bigger than it’s ever been. Yet our hospitals and our schools and our nurses and our doctors and our teachers who staff them are struggling. Our firefighters are striking twice a week because the fire trucks meant to save lives are falling apart.

Those public services don’t fail overnight. When we don’t invest in them properly, those services get slower, more stretched and further away with every year that passes. There’s a word for that: austerity. It is how you break a country in slow motion. This Government is boasting today about new money for health and education. But once you actually count inflation, a growing and ageing population and what it really costs to deliver these things, much of that record investment is actually a cut in everything but name.

This Government will do anything in order to avoid taxing the mega-rich. They’ll take our school kids’ lunch money. They’ve made real-term cuts to our schools and to early childhood education, meaning higher fees for parents. They’ve cut $300,000 from programmes that help New Zealanders with energy hardship, when record numbers are struggling to pay their power bill. They have raided millions of dollars from food banks and taken away almost $700 million from public housing tenants. I guess just some of us are entitled to our entitlements.

Their decisions will close down sexual violence prevention services. Christopher Luxon promises that growth means more money in our economy. And, actually, he is right about that. But what he’s not being straight up and honest about is that he knows that that growth is not being shared. He knows that under his economic rules, that wealth goes straight to the top. But maybe I’m being too generous. Maybe he actually truly does still believe in trickle-down economics, just like some believe in the tooth fairy. Maybe he believes his own shtick about hard choices as he entrenches an economy that has been designated as a speculator’s tax haven by Australians—the same Australians from the same Australia where higher tax rates on those who can afford to pay means that there is the Government revenue necessary to invest in better public services and infrastructure; the same Australia that this Government is sending so many of our best and brightest to, because under this Government, New Zealanders are having a really hard time imagining a better tomorrow, here at home.

Look, I know politics is hard. I know that changing your mind and doing something differently in this environment, of all places, opens you up to all kinds of attacks—that you’re U-turning or backtracking or whatever we want to call it. I would like to think, if I was privileged enough to be sitting in those seats over there making decisions about where our country’s collective resources are used, if I had spent two years making decisions that were hurting regular people‍—

That’s not going to happen. You better start learning the song “Lonely Street”.

—that I would pause and reevaluate, Mr Peters—that I would listen to the chanting of the emergency service workers on strike for the longest industrial action in a generation, to the cries of babies that this Government knows are being born into unnecessarily and entirely preventable poverty; to the New Zealanders down at the returned services club who just wants some leaders with a spine.

Instead, this Government ploughs ahead with their economic doom loop. They’ve decided to mercilessly cut back on spending without any idea of how the market that they worship is going to fill the gap—that shocked business confidence that they said that they cared about—and the private sector investment also contracted by 2 percent. They cancelled thousands of new State builds and hundreds of infrastructure projects, which has meant the loss of 15,000 construction sector jobs. Each job lost isn’t just devastating for that person and for their family; it is devastating to the local community and to the local economy and to the small businesses where they brought a morning coffee or went on a date or did their home renos through. What is this Government’s response to this doom loop of their own creation? It’s not to stop and think that maybe this thing isn’t working, because maybe instead of a plan, they’re running on instinct, a well-documented, well-exercised National Party instinct to hand over our collective wealth and control to a few people at the top.

Former National Governments sold off State housing, which now means we hand out billions to line the pockets of private landlords. Former National Governments sold off parts of our State-owned power companies despite an overwhelming referendum in opposition, and now we all pay for an energy system driven by profit at the expense of innovation and renewable generation. Former National Governments shut down and amalgamated ministries and departments, closing factories and putting a wrecking ball through the regions. This National Government is no different.

New Zealanders deserve so much better and the Greens have shown that better is possible. If we dared to tax multi-multimillionaires and billionaires so that they contributed fairly to the country that helped them to build that wealth, we wouldn’t have to rely on charity to get new ambulances on the road. We could use this big, old economy democratically to achieve the things that no one of us could achieve alone, because very few people have the individual wealth to build a hospital or refurbish old classrooms, but together we have more wealth than we have ever had. We can create jobs, we can build the things that we need, we can protect the natural environment that we literally rely on for life on Earth as we know it. Or are we just going to keep pretending that megalomaniac billionaires are going to solve our problems?

I actually agreed with the Prime Minister when two months ago as the fossil fuel crisis was hitting, he said boldly, “Hope is not a plan.” However, at exactly the same time, his Minister for Energy was quietly cancelling the long-awaited energy plan. The fossil fuel crisis has put a spotlight on the ticking time bomb sitting at the centre of our economy. While Luxton’s Government seems intent on finding new ways to lace this time bomb into the fabric of everything that we do, as this Government hopes and prays for new fossil fuel shipments and every time one is confirmed they just hope to restart that time bomb countdown timer, if that counter gets to zero, our entire country, our entire economy grinds to a halt. It’s not just sensible—

It’s meant to be at zero already. That’s what you guys said 10 years ago.

It’s not sensible, Mr Winston Peters, to spend all of our resources fixated on feeding that beast in the hopes to just reset the clock. We need to diffuse the time bomb.

The next step is rewiring our economy and country around something that will not blow up in our faces, because we do not get affordable, secure energy from expensive fuels that have to be hauled in from the other side of the planet; we get it when we tap into the abundant water, wind, and sun, and the geothermal activity beneath our feet. We get it when we electrify everything. That is what it means to build resilience. It’s what it means to insulate ourselves against imported inflation. It’s what it means to build a country.

It’s not just about nation-building; it’s common sense. It’s taking control over the things that we have control over. But this Government is giving up control, not to regular New Zealanders, but to corporations, to offshore shareholders, and the fewer and fewer people who are getting more and more of our resources. Funnily enough, if our country was the business that Christopher Luxon seems to think it is. It would also be a failing business, because in business you don’t succeed by firing all of your staff, cutting off your sources of revenue, and then begging rich out-of-towners to maybe pop over because they can avoid paying tax—close your eyes to the crumbling infrastructure. If things aren’t going right, you get a new business plan. You find a new strategy. But a country is not a company, and a Prime Minister is not a CEO.

Prime Minister, I have spent two years inviting you to come and walk the streets of Auckland Central, to meet the people, including the children, who your policies have made homeless. I invite you to go and stand in the middle of Bendigo in Central Otago and tell New Zealanders with a straight face that you want to poison the local waterways and churn out our pristine biodiversity into a mine to make a quick buck for an Australian mining company. I invite you to come and sit with me, with the regular people, at Mount Smart Stadium during a Warriors game to talk to the couple from Hamilton who sit next to me, who drive up every other week for the game, who tell me that your Government has been a wrecking ball for small businesses because you’ve sucked all the money out of customers’ pockets.

Prime Minister, I invite you to go outside, to touch grass, to breathe the air, to look the New Zealanders that you are supposed to serve in the eye. Those things are real; those things matter. When your made-up economic rule book is destroying those very real things, those silly rules have got to change.

Here is the hardest truth, and it’s actually not for the theatre that is this place; it is for the New Zealanders beyond these walls: no one is coming to save us. New Zealanders are going to have to do this for ourselves. On 7 November, New Zealanders can resign this Government to the history books. But we are not going to spontaneously end up with a Government that is willing to take on the well-resourced lobbyists in this country and to work actively in the interests of regular people.

We are going to need a new kind of coalition. I am not talking about the boring circular talkback talk of which politician is going to negotiate with which. I am talking about New Zealanders coming together with a common, intentional idea about who we are as a country and where all of us want to go. Because when everything feels complicated and chaotic, I believe that we can agree on some basic things: every New Zealander is entitled to a safe home, a good education, affordable food, a secure job, reliable transport, renewable energy. Those are the non-negotiables that every New Zealander is entitled to and they can be the building blocks to help us rebuild our country, for all of us. These are the things that we should fight for, not just for ourselves, not just for the people who we know and love, but even for the people who we don’t know and don’t like.

To anyone and everyone who is listening, I am asking you not just to believe in the Greens; I am asking New Zealanders to believe in themselves, to believe in each other, and to believe in the country that we can create if we are willing to work together to make it a reality. I am asking New Zealanders, though, not just to believe; I am asking them to act, because if New Zealanders are feeling powerless right now, it’s kind of by intent. That’s exactly the strategy and the plan of this Government, to have regular people switch off so that power and wealth gets concentrated in fewer and fewer hands. I promise New Zealanders that they will find their power when they go out there and they talk to other New Zealanders about these basic things that we have in common that we are willing to fight for for each other. New Zealanders can do more than vote this election; they can join the campaign to rebuild this country.

15:48

There are easy lies and there are hard truths, and after years of easy lies about our nation’s finances, we are coming to the hard truths. We cannot spend and borrow our way to prosperity. We have to pay the bills and we have to balance the books. Finally, in this Budget, we are bringing together the hard truths to chart a course to honest prosperity where we pay our way, we balance the books, and people can again afford to live comfortably because the Government is managing its money as carefully as they’ve been forced to manage their own.

This Budget is backing the hard-working people who get up and make a go of it while cutting the things that don’t work to provide more of what does. It is, I think, a tribute to three parties working together, associate finance Ministers and a Minister of Finance from ACT, National, and New Zealand First coming together to create this third Budget of our three-party coalition. That is a triumph that is better than our worst enemies’ worst nightmares—that we are able to deliver, in challenging times, in the middle of a global oil shock, a pathway to a balanced Budget earlier, with no new taxes. That is the choice that countries are facing around the world, because there are two paths to balancing the books: there is either tax more or spend less. As I remember Nicola Willis once saying, we don’t have a revenue problem; we have a spending problem in Government. If you want to solve the problem of borrowing and deficits, you must get on top of wasteful Government spending.

There is a contrast opening up, not just across the divide of this aisle but across the Tasman Sea. You look across the Ditch, and we’re not feeling like the lucky country so much now, are we, cobber? I mean, those guys are going to have deficits through to 2035, and new taxes to try and balance their Budget. What that tells you is that, if you try to squeeze people until the pips squeak, if you believe the path to prosperity is to take money from anyone you can find that has it, until nobody wants to create wealth in your country, eventually you will all be poor. In fact, the only thing that socialist thinking has done for the poor is give them a lot more company. That’s why this Budget is just what the doctor ordered.

The spending amount—the new spending—was going to be $2.4 billion in December; it’s now going to be $2.1 billion. That’s $300 million less, and it’s the same for the next four years. That’s $1.2 billion less spending than was expected just six months ago. That is a triumph, and it has been done with a plan to have fewer Government departments and fewer bureaucrats. It’s just what the doctor ordered, and it’s something the ACT Party doctor was prescribing years ago. It’s a prescription that has become increasingly popular. We’re going to see the amount of money taken up by Government down to 30.3 percent of GDP, after it peaked under Labour at 35 percent of GDP. That means that, for every $20 in the economy, we are saving people $1 by spending less every year. That is the kind of progress towards the smaller, more efficient Government that we need.

What are the dividends? Over 200,000 new jobs forecast, 2.7 percent economic growth year on year, and the surplus coming forward a whole year to 2028-29. This is a Government that is fixing what matters, and what matters is not finding new taxes and new revenue tools but fixing the spending to do more for less. On that, this Budget will be familiar to many New Zealanders, to many households. It will be familiar to many businesses, who have to cut something that doesn’t work if they see something new that they want to spend on. That means, wherever we’ve spent something new, the chances are it’s come from the $1.7 billion in savings that we have been able to make. If you want something new, you have to make savings elsewhere, and finally, after years of thinking that somehow economic gravity did not apply to Governments, especially those filled with Labour politicians, we have come back to Earth, back to reality, because, “Oh, there goes gravity.” We are passing a balanced Budget in just a few years thanks to our responsibility.

These choices allow us to do a number of new things that I believe will ensure New Zealanders have the opportunity in education, the care in health, the safety in the street, and the prosperity of knowing that, actually, your efforts can make a difference. If you make good choices, the deal can be kept: you can find yourself with a home and a career and a family and security by doing the right thing. For too many people, that has been lost for too long because the Government has been sucking up any extra cream that they created. We’re going to see $54 million more in Pharmac, all of these things made possible by saving more money. That comes after we gave $1.774 million extra money to Pharmac to fill in a fiscal hole left by Labour, and then another $604 million for extra medicines that have so far benefited a quarter of a million Kiwis with new medicines they would not have had access to, had it not been for this extra spending. We’re now putting another $54 million into Pharmac, the largest of the specific headline initiatives under this Budget. Pharmac and medicines have experienced a revolution. I’d like to thank all of my colleagues, especially Todd Stephenson, who had been such a strong advocate for making better use of medicines.

It is now seven years and two months and 13 days since I sat over there and stood against the whole Parliament, against rushed gun laws, and I said these people who have firearms are not actually bad people. What has happened is bad, but they do not deserve to be punished for it. As a result, we, as the ACT Party, have stood up for the simple idea that, yes, firearms can be dangerous, and, yes, we need to ensure that people are kept safe from them, but that shouldn’t come at the expense of treating legitimate firearms owners with the basic respect and dignity that is due to all law-abiding Kiwis. With Nicole McKee, we see $45 million in this Budget put towards a new firearms safety authority. It never should have been the Police, and that will also ensure that those licence fees don’t have to go through the roof to pay for it. They will be stable.

All over the country, we see wilding pines sucking up water that could have been used to grow food and generate electricity. There’s $79 million in this Budget for Andrew Hoggard’s initiative to cut down those wilding pines. You might have seen on TV ONE that he’s already started. He’s not the kind of politician that leaves it to other people.

Then, with Simon Court and my good friend Chris Bishop, we have seen enormous effort to fix perhaps the biggest handbrake on New Zealanders’ opportunity in this country, and that is the bureaucracy called the Resource Management Act that has made it so easy for so many people to say no, leaving a whole lot of people wondering when on earth we are going to start saying yes in this country. Well, I’m proud that we have a Resource Management Act currently before select committee, coming back to this House soon, that will put property rights at the centre of resource management law. That is an ACT Party achievement. It’s probably something I’m prouder of than anything, but it also has got to be put in place with enormous expertise. Having Simon Court and Chris Bishop on the case makes me very confident and very determined to win the election so that they can do the implementation. They’re going to put in place electronic record-keeping in consents—like we’re a modern, civilised country—so you can get your consents faster and be able to develop your own property, which some would call tino rangatiratanga. Who says the ACT Party doesn’t support article 2 of the Treaty?

Then there’s infrastructure, and there are so many projects, but I just want to talk about two. My mum was the chief pharmacist at the Northland District Health Board, and in the school holidays or after school, I sometimes used to go into the hospital pharmacy. That was a wee while ago, and the building wasn’t in great shape back then—

Three years ago.

Fifty years ago?

Three—three.

Three years ago? Oh, you’ll keep. It was a while ago, and the building was not in great shape then. To see Whangārei Hospital built for the people of Northland, and restored, I think is a long-overdue investment. And the Waikato Expressway—whenever I venture down south, past the Bombays, I’m brought to life by the amount of energy in that part of the country, the “golden triangle”, and we have a road that is ready to go, has a benefit-cost ratio—or, as Julie Anne Genter would say, a “bee-cee-arr”—of 3.2 to ensure that we’re getting real economic growth and opportunity in that very fertile part of the country.

We’re also doubling the number of trade training apprentices. Paying wealthy constituents of mine their entire university fees for one year so they could kick the tyres—that was wasteful spending. I don’t know how many people came up to me and said, “My kids don’t need this.” They even said, “I don’t need this.”, the really honest ones. We’re going to finish that and double the number of people in trade training.

I see Cameron Luxton up there. I think it’s important. We haven’t had enough respect for the trades. We’ve sold the cap and gown dream with subsidised university degrees to all and sundry who show up for one, but the quality’s gone down and the trades have been neglected. Some people even get one of these degrees and retrain in the trades anyway. I actually met with the plumbers guild. They said the number one source of recruits for apprentice plumbers is Auckland University of Technology (AUT). I’m not saying there’s anything wrong with AUT, but that’s what they told me. We are slowly rebalancing from this oversold cap and gown dream to a practical reality of trade training.

We’re seeing $1.5 billion on naval capacity. In our party campaign, we said it’s not sustainable to have one ally that spends twice as much and expect them to help us when we won’t help ourselves. We were spending only 0.9 percent of GDP on defence. That’s heading quickly towards 2 percent. With Chris Penk, our defence Minister, a former submariner in his own right, we are seeing an enormous investment in naval capacity, and not just buying conventional stuff but the kind of drones, some of them made in New Zealand, that will define future military conflicts. Anyone who’s watching anything in Ukraine will know all about that.

I’m pleased to see $40 million in uplift for early childhood centres. We’re deregulating, we’re cutting the red tape, but they face cost pressures and they’re getting a 1.5 percent uplift, which, critically, will begin on 1 July. They don’t have to wait until the end of the year, like they normally do under Budgets. That money will start flowing. There will be additional funding for people who are bringing up the youngest New Zealanders. That will start almost immediately.

But the thing I’m perhaps most proud of in this Budget, of the new things that this Government is spending on is the council growth incentives. Brought together again with my good friend Chris Bishop, we have put together this policy that makes a long-term dream a reality. I announced this policy as ACT’s housing policy in 2016, much closer to when I was visiting Whangārei Hospital. We went out and we said, “Look, if we don’t give councils a reason to say yes, then they’ll look at all the reasons to say no.” All the infrastructure costs, the grumpy neighbours, the liabilities—so many reasons to say no to someone building a house. Why don’t we give them a reason to say yes?

Back then, we called it GST sharing. The spirit of that is here. If a council consents a building, then they will get a quarter of a percent of the value of that building. But if they do more than 1 percent of their existing housing stock, it goes up to half a percent. If they do more than 2 percent of their existing housing stock, if they consent that many houses in one year, then they will get 1.25 percent.

What that means in real terms is that if Auckland had done this last year, they would have got $32 million. If you think about the Queenstown Lakes District—one of the fastest growing regions in the country, under massive infrastructure pressure—they would have got $7.5 million. You think about Christchurch, you think about Selwyn—a lot of people flocking to Christchurch. It’s a cool place these days, you know? They’d get about $8 million each of those two adjacent councils. In the context of a council balance sheet, this is serious money.

What’s more, you have people—the mayor and the chief executive of the council—going down to the planning department and saying, “Hey, why don’t you issue a few more consents? We’ll get more money from the Government.” We’ve got to change that political economy. This was something that Brooke van Velden put up in a member’s bill five years ago. The whole Parliament except Labour voted for it and now it’s become a reality, because everyone on this side of the House knows if the next generation’s going to have the security and the affordability of housing, then it’s going to take getting the incentives right.

The ACT Party is the party of sensible economists. By the way, 100 percent of the economists in this Parliament are members of the ACT Party. Same with engineers; we’ve got 100 percent of them too. If it starts with “E”—we’ve got all the Es. I just want to say one other thing about this—

Building practitioners.

And 100 percent of the licensed building practitioners, yeah. This is being done with no new taxes. In fact, there are even some reductions in taxes. For a long time, the Foreign Investment Fund tax has been a bugbear where people have said, “Look, I want to live in New Zealand, but sometimes I want to invest overseas and I don’t want a stealth wealth tax taking my money—5 percent deemed return that I just have to pay.” Lately, it’s been pretty hard to make that return and so we are introducing the revenue accounting method, not just for people who moved here recently, but for all New Zealanders who are liable for the Foreign Investment Fund tax.

We’re increasing the threshold for paying that tax to $100,000 from $50,000. I hope I’ve got that right, revenue Minister. Yes, I do. Thank you. I write my own speeches, so you can never be too sure. That amounts, on the Foreign Investment Fund, to a $72.5 million tax cut to encourage people to stay in New Zealand and invest, and that, to me, says hope and growth.

That is the choice that we face in this Government and that we face in politics in every country around the world. I said in my maiden statement to this House 12 years ago nearly, if you know the answer to a simple question, you know everything about a person’s politics. There are people who think there is only so much to go around and the point of politics is to take from one person and give to another person who will vote for you. That is zero-sum thinking. If you listen to, say, I don’t know, the Greens, that’s all they ever say, that your problems are caused by someone else’s success and we’re going to take their money to give it to you and you’ll be better off. That’s the only thing they have to say. I see poor Lan Pham, who in fairness is kind of a hostage in the Green Party but sometimes does talk about the environment. She’s honest with herself. She knows that’s all her colleagues ever say.

The other alternative is positive-sum thinking—positive-sum thinking that actually we can trade value for value with each other and get stronger together, that when people save and invest and put something away today, that’s not a bad thing. That’s actually the only way that we’re able to produce more each day, to save a bit more, to consume a bit more, to do things smarter and actually be able to provide the things we need while having the innovation to reduce our impact on the planet. That is positive-sum thinking that the only real resource in the world is human creativity. Human creativity thrives in a free society where we back people, even if they’re a bit different, even if we don’t quite like them. We say, “You’ve got a right to make the most of your time on earth.” You never know when somebody in that position—I see Julie Anne Genter; she’s perplexed. She’s shaking her head. She’s never heard of this before. Well, buckle in, Julie Anne Genter.

This is the way that people discover new things—new medicines, new technology, new sources of energy, new ways to move around the world, new ways to live happier, healthier, wealthier lives. On this side of the House, and particularly in the ACT Party, we stand for that simple idea that the creative powers of a free society are the only true resource that we have. If we unleash them under the rule of law, with respect for the equal dignity of each and every one of us who inhabits this free society, then you just don’t know what we can achieve, but maybe we will show that Kiwis really can fly. Thank you, Mr Speaker.

16:09

Thank you, Mr Speaker. In about 20 weeks, we will be trotting off around the country and New Zealanders will be making their way to the ballot box, casting, offering their views, and showing who they prefer to run the country. We’ve just heard from the Leader of the Opposition as to why the nation should prefer his menu of rhetoric, his preferences, without that individual offering one concrete idea as to why New Zealanders should move from this side of the House over there.

That is a classic case of him believing vacuous-sounding rhetoric, saveloy sausage—I was about to say pie eating, but I enjoyed the pāua pie the other day—but other gimmicks that, sadly, New Zealanders have begun to see as the distinguishing feature on that side of the House—not one single policy intervention, not one concrete idea, not one justification as to why they condemned New Zealand to the state of penury, fiscally speaking, where we find ourselves. We are not in a position to offer a Budget of glitz, of fiscal profligacy. We are rebuilding the nation. We are rebuilding the economy. If anything, it’s a brick house Budget. The analogy is when you’re rebuilding something brick by brick, you have to start with the foundations.

That is why one of the most handsome features of this Budget—and I have to acknowledge my colleague the Minister for Infrastructure—is the substantial amount of capital that this Government, facing straightened circumstances, has put into capital projects. Just to give a little bit of background, the size of our GDP is $450 billion. Now, sadly, Treasury tells us that we have rather challenging growth trajectories in front of us—sub - 3 percent. I personally would love to see it much higher; 3 percent is at the very bottom range of what New Zealanders expect us to do. However, we are still stuck with the overhang of what we inherited as a consequence of the massive spend-up on that side of the House.

When you do take an approach of rebuilding your economy and starting with the foundations, you need capital projects that are ready to be assembled and ready to be delivered, but for that, you need people who think and who represent the public in the State service and who are capable of delivering. Look no further than what our Government inherited, the Dunedin Hospital, a project driven by the last Government that left us with some very difficult capital project choices. Fortunately, we were able to make them. Fortunately, we were able to find the money as a coalition Government. But, boy, there are some sobering lessons in there! We need to ensure that our civil service is fit for purpose. We need to ensure, going forward, that when we spend 6 percent of GDP on capital projects, which basically means $27 billion—i.e., 50 percent of that is the Crown, the next 25 percent is local government, and the last 25 percent is private sector, including gentailers and other entities that are regulated in terms of their earnings, although you know as well as I do the gentailers aren’t regulated, but, taihoa, there will be more on that during the upcoming election.

So, yes, it is a rebuilding Budget. Of course, it’s not the Budget we thought we would enjoy passing back in 2023. However, when you are confronted by geopolitical challenges and unwanted outbursts of hostilities in the Middle East, and the imposition of uncertainty coming from the United States of America, then it does require skilful navigation. It does require a reordering of priorities, but that requires fiscal stewardship, not these empty promises from that side of the House, not these hackneyed phrases that, somehow, there’s a fiscal tree that you can shape every week, every month, and golden apples will just float around on the ground and that you don’t ever have to take account as to who’s funding them. So, yes, New Zealanders, this may not be the Budget that you hope to see in the context of an election year, but we are rebuilding—coming from a set of challenging circumstances—the foundations of your economy with new hospitals, with new roads, with a revamped military, and with energy.

It’s not our fault that firms up and down New Zealand find themselves marooned as a consequence of the Labour Party closing down the oil and gas industry and refusing to spend any money on finding other sources of energy. That fell with due modesty to the man standing in front of you to find the money, to ignite the investment in oil and gas with the $200 million, to underwrite the new investment in geothermal energy, to underwrite the new frontier developments in terms of nuclear energy, and to underwrite the developments of hydrogen. New Zealanders, these may not be the most sexy things in the middle of an election year, but unless we sink deep the foundation poles of our economy, in the capital sense, we will struggle—we will struggle. Please do not buy into the hollow, empty promises. Sadly, they believe that by saying nothing and keeping a small target either on the forehead or the back, votes will fall like leaves in an autumn storm into their electoral kete. I have more faith in the belief system of the average Kiwi for us as a country to fall into that rubbish.

No better remedy lies in rebuilding your country than investing in young people, rangatahi. That’s why I have to acknowledge my leader, who showed a level of pragmatism and adaptability to change our coalition agreement in consultation with Nicola Willis to steer the money away from universities to get the nephs off the couch—$300 to $400 million dedicated to meeting the costs of more of the young teenagers, school leavers, to prepare them for the jobs associated with building the infrastructure of the country. To all of the critics out there listening to Radio Waatea and listening to Waipareira, hearing that there’s nothing for the whānau in this Budget, that’s where you’ll find your young people knocking on the door, looking for a job, and the only way you’ll develop their skills for a job is to prepare them for the labour market. I personally have nothing against kapa haka, but my haka days are sadly over, but please don’t believe that you’re going to unleash a level of passion, skill, or talent only by focusing on cultural pursuits. Unless we prepare all young New Zealanders and endow them with the human capital capacity, we will not fulfil their ambitions. There will be thousands of young men and women, irrespective of their ethnicity, who will be the beneficiaries of New Zealand First working with the National Party and the ACT Party to transfer the dough that was originally dedicated to, and being enjoyed by, the students at university back into that area where we find people struggling, the blue-collar communities, the communities at the earthy end of our economic equation.

Now, look, I want to talk about the fact that our revenue is forecast to be about $9 billion in terms of growth. I know as well as you do that, up to 2030, it has to grow much quicker than that. But the question is: are we as politicians up for the interventions, the changes, to accelerate the growth in revenue? I can tell you there’s one party over here who wants to ban mining on the Department of Conservation estate. They are never going to be up for the growth of revenue.

Thirty-four, 35, 36 percent of our landscape is under the imaginary title of Department of Conservation land. We have got to agree, within certain guardrails, we can use the resources of this country. We must use the resources of this country, create those jobs that are high paying, attract the New Zealanders who have gone to Australia and other such places, because we can do what our forefathers and their wives and their aunties and their uncles did, and grow rich by using our own resources. Because, without a growth narrative, we will not achieve what we expect our children, and hope that our children will achieve.

It’s important that I move on and talk about another area of uncertainty in New Zealand society. As we have sought to boost the size of our New Zealand population through immigration and we’ve changed the demography of our country, it’s heartening to see nigh on $20 million has now been dedicated to cope with migrant exploitation. To all of the naïve scribblers with their breathless belief that somehow, by boosting—uncritically—our population and remaining blind to the opportunities that are exploited within those communities to do wrong to their own, we cannot remain blind to those practices; they are rampant.

Therefore, the labour inspectors need to be a lot more vigilant, and if it’s good enough for all those cuzzy bros of mine on Tairāwhiti, in the East Coast, to be snapped every month bringing illegal pāua back to shore, I expect to see the illegality rampant in those migrant communities snapped on television, on the radio, in the media, so that sunlight shows it offends what it means to be a New Zealander and to watch that level of exploitation, watch that level of criminality, offending every tenet of our Judeo-Christian background in New Zealand, to satisfy what? A new wave of migration to keep a small cast of employers happy? I can’t wait for the campaign to begin so I can really ramp my rhetoric up about that.

So full marks—full marks—for the migrant exploitation allocation that sits almost as comfortably with New Zealand First as the $50 million for front-line policing. I am that part of the rose tree between these two petals—the two police Ministers on either side of me—and I want to acknowledge their efforts for the $50 million of front-line policing. I won’t continue the analogy.

There are some deluded souls who regard policing as an affront and an attack on indigenous rights. Sadly, members of that political movement are akin to the moa: soon to be extinct. They misrepresent the bulk, mainstream Māori opinion in our New Zealand society. No one should fear the police; however, all should be capable of holding the police to account because they are not only the protectors of the community, safeguard our standards, but they know they operate under the law, and when we rely upon the law, we need to know that the police will be visible. We need to know that a new cadre, a new group of New Zealanders, will be attracted to represent their communities and uphold the standards of what it means to belong to a secure, safe element in our society.

Now, there has been a mad rush to claim authorship for the money associated with the road ambulance service. I know, it’s often said that success has many authors and failure is an orphan. Once or thrice in my career, I have been described as an orphan. However, we should all celebrate the fact that these are front-line service workers. We have managed in the final Budget, over our three-year journey, to address the needs and interests of, and support, our fellow Kiwis delivering those essential services; men and women often overlooked. Indeed, I know there are people in this House, including Minister Watts, who have volunteered their time, actually being members of this distinguished group of New Zealanders. It’s a matter of great pride for my leader and our caucus to have played a small role in contributing to the resilience associated with that group of Kiwis.

I can’t go much further before I finish this speech and remind everyone about the fuel resilience challenges. We most certainly can no longer continue blindly into the future and ever allow ourselves to be held hostage to Hormuz ever again. Sadly, it was Megan Woods, in her fanciful belief that somehow New Zealand under her leadership and that political refugee from electoral justice, otherwise known as Jacinda Arden—that somehow by closing down the refinery, New Zealand would save the planet. We now learnt 720 million litres of storage was destroyed.

I shall be there very soon; I shall be celebrating the arrival of the diesel storage, a recommissioned $100 million tank funded by a $1.2 billion fund negotiated by Winston Peters at the formation of the last Government. The $1.2 billion fund reflected the 2023 coalition Government. There will be another coalition—God willing—agreement, 2026-27. I don’t want to be boastful and talk about what that figure will be; that’s really up to the electorate. But those matters lie in the future. We have put pūtea tea aside; we have put money aside—$150 million - plus to ensure, in the event circumstances do worsen, we are not so flinty, we are not so short-sighted that we won’t allocate the necessary fiscal succour to keep our economy turning over.

Yes, it’s important that we retain an eagle eye over the scale of the size of the State, but this party will never buy into these very shallow, Thatcheristic ideas that we can walk away and completely trust the market. That’s just never ever going to happen in terms of any Government that Winston Peters, myself, and our caucus are blessed to be a part of, which is why we don’t actually believe it was a bad thing to spend money to secure resilience. We look forward in the future forming other governments to protect firms that we’ve done through the $1.2 billion gas resilience fund—i.e., the bank guarantee.

To all the businesses who came to see me, came to see Simeon Brown, came to see other Ministers, and complained that there was no light at the end of the tunnel, I say to you: “We need a dose, at all times, of optimism. We can grow, we can be strong, we have the resources that our forefathers could only dream about.” But what we need is to be unshackled from this risk-averse, woke-riddled, doubt-riddled culture that we have inherited. If we do that, the world will be our oyster. Kia ora tātou. [Applause]

16:29

Thank you for that, New Zealand First. I didn’t expect applause this afternoon.

All I wanna say is that

They don’t really care about us.

Throughout this term of Parliament, Māori voices have been consistently denied, and today Te Pāti Māori rises to give its contribution in one of the most important debates before November’s election. Here’s the gist of it: overall, Māori got 0.24 percent of the Budget, non-Māori got a $13.4 billion increase, and Māori lost $34 million, and there was a $136 million reduction of Māori development funding—the lowest investment into te iwi Māori in 15 years. It appears that it does matter if you’re black or white.

As Māori voices continue to be silenced inside this House, this Government continues to ignore the voices of struggling whānau outside of it: the voices of whānau at the supermarket checkout, the voices of kaumātua choosing between power and prescriptions, the voices of parents skipping meals so their babies can eat, and the voices of rangatahi packing their bags for Melbourne, Perth, and London because the Government has made it too hard to build a future at home. This Government might want Māori to beat it from the Budget debate, but our people are saying something much clearer: “They don’t really care about us.”, and the Budget proves it.

This Government has lost focus on the real issues facing our people. Instead of fixing the economy, they have been fixated on overseas culture wars, importing division, stirring up fear, and trying to start their own thriller here at home. But there is nothing entertaining about families struggling to survive. There is nothing iconic about poverty. There is nothing smooth about a criminal economy that keeps working whānau struggling. This economy is no longer designed to serve ordinary people.

Te Pāti Māori believes Aotearoa should be run like a marae. On a marae, we welcome you, we house you, we feed you, and we care for you. On a marae, you do not leave people standing out in the cold while a few sit comfortably inside. You do not lock the cupboards while whānau struggle to afford kai. You do not measure the strength of the marae by how much wealth one person has accumulated; you measure it by the collective oranga of the people you have cared for. But this Government’s Budget does the opposite.

This is not a Budget built on manaakitanga. This is not a Budget built on tikanga. It’s a Budget that looks our struggling whānau in the eye and says that it does matter if you are black or white, because the reality is Aotearoa has had two years of the worst economic performance in history.

The cost of living crisis has become a cost of survival crisis. The electricity costs are up more than 20 percent. Rates are up nearly 22 percent. Health costs continue to rise, food prices continue to climb, and behind every statistic is a whānau making impossible choices. Our parents are skipping meals so their tamariki can eat first. Our kaumātua are putting off doctors visits because the power bill comes first. Our aunties and uncles are putting $10 in the car and praying the fuel lasts until next payday.

This Government talks about economic growth, but whānau do not experience the economy through GDP graphs. Whānau experience this economy at Pak ’N Save, at the petrol station, when the rent comes out, and when the power bill arrives. Our people are asking will you be there—will this Government be there for workers? No. Will this Government be there for renters? No. Will this Government be there for kaumātua? No. Will this Government be there for rangatahi? No. Will they be there for Māori? Absolutely not—at 0.24 percent.

Under this Government, Māori unemployment has risen from 6.8 percent to 10.8 percent. That is not accidental. That is not just bad luck. That is political failure, and when our people are asking for help, this Government is telling them to look at the man in the mirror, as if poverty is a personal failure, as if unemployment is a character flaw, and as if homelessness is poor budgeting. But Te Pāti Māori says to look at the system—look at who benefits and look at who pays the price—because this is no longer the story of the haves and the have-nots; this is the story of the have-nots and the have-yachts.

The top 10 percent now own nearly half the wealth in Aotearoa, while the bottom 50 percent share just 6.7 percent between them. The bottom 20 percent now hold negative wealth. Meanwhile, billions remain protected inside family trusts while ordinary whānau are struggling to put kai on the table, and still this Government tells our people that there is no money. No money for housing, no money for health, no money for kai—no money for Māoris. Somehow, there’s always money for landlords, consultants, and tax cuts for the wealthy.

Te Pāti Māori believes in having an economy grounded in manaakitanga and collective wellbeing, but this Government has built an economy where the reward rises to the top, while the burden falls on working whānau. This is not a Budget for workers. This is not a Budget for renters. This is not a Budget for whānau trying to survive, let alone live. This is a Budget that rewards privatisation.

This is a Budget that pits people against each other. This is a Budget that sells off the strategic inheritance of our mokopuna, a Budget that asks our people to keep paying more, while the wealthy keep taking more, and then they wonder why rangatahi are leaving. Our young people are looking around and asking whether Aotearoa still has a place for them. Born here, raised here, educated here, loved here, but now forced to search for their Aotearoa hou somewhere else—Melbourne, Perth, London—not because they want to leave home, but because they no longer believe they can afford to stay. They are leaving because this Government has priced them out of their own future. You cannot build an economy by forcing our next generation offshore. You cannot claim to care about the future while selling the inheritance of our mokopuna today.

Te Pāti Māori believes Aotearoa should be a place our people can afford to call home: a place where everybody has a role, everybody is cared for, and nobody is left outside; a place where the vulnerable are protected, where our kaumātua are honoured and our mokopuna are supported; and a place where every whānau has the right to be housed, fed, cared for, and loved. That is not radical; that is manaakitanga and that is tikanga. That is what every marae already understands.

Why? Tell them that it’s human nature—and the truth is the wealth already exists in this country, but it is simply trapped at the top. That is why Te Pāti Māori will implement a wealth tax. Under our policy, 98 percent of Aotearoa will pay less tax. That means that more stays in the pockets of our working whānau, instead of the ultra-wealthy. A nurse should not pay proportionally more tax than a millionaire hiding wealth in trusts. A cleaner should not have to carry more of the load than someone whose wealth grows while they sleep. A whānau working three jobs should not have to be told to tighten their belt while the wealthy keep changing the rules to protect themselves. Our Te Pāti Māori tax calculator lets whānau see it for themselves. We are saying to check the numbers, look at the impact, and see who benefits under our policy, and while this Government attempts to suppress Māori representation, our people continue to rise.

Since this Government took office, 35,000 Māori have switched to the Māori roll, and 55,000 new voters have joined the Māori roll. Right now, there is an eighth seat waiting there, but only if our people enrol. That is why this election matters. This election is not just about changing our Government; it is about deciding what kind of whare we are building together. Will Aotearoa become a haven for wealth and corporations, or will it remain a home for its people?

This Government wants our people to stay quiet, but Māori are not quiet. Our people are rising, and this year our message is simple: get on the Māori roll, vote in this election, and make this a one-term Government, because when a Government shows us again and again that they don’t really care about us, then we do what our people have always done. We organise, we mobilise, we rise, we vote, and we tell them, once and for all, “Beat it.” Kia ora tātou.

16:39

I move, That this debate be now adjourned.

I move, That urgency be accorded the first reading of the Appropriation (2025/26 Supplementary Estimates) Bill; the introduction and passing through all stages of the Taxation (Budget Measures) Bill No 3, the Social Security (Modernisation) Amendment Bill, and the Gas (Market Transparency) Amendment Bill; the third reading of the Regulatory Systems (Internal Affairs) Amendment Bill and the Credit Contracts and Consumer Finance Amendment Bill; and the remaining stages of the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill and the Patents Amendment Bill.

Today, we are moving urgency for Budget legislation as is done each year. The Taxation (Budget Measures) Bill is being progressed through all stages to give effect to Budget-related tax measures that will enhance economic growth.

The Social Security (Modernisation) Amendment Bill is also being progressed through all stages. This bill will enable the Ministry of Social Development and Employment to administer the welfare system more efficiently and accurately and achieves forecasted savings from Budget 2025.

The Gas (Market Transparency) Bill will progress through all stages to secure New Zealand’s energy future by ensuring Ministers have powers to increase transparency on gas usage and supply.

There are also four bills currently on the Order Paper which the Government intends to pass in this Budget urgency motion. The Regulatory Systems (Internal Affairs) Amendment Bill will have its third reading. This bill needs to be in force by 1 July so that the insurance sector has the current calculations for the end of the year.

The Credit Contracts and Consumer Finance Amendment Bill likewise has the third reading scheduled. This is so that the legislation can be in force by 1 July to avoid unnecessary costs on businesses and consumers.

The Financial Service Providers Bill and the Patents Bill are progressing through their remaining stages. The Financial Service Providers Bill will provide guidance and independence of dispute resolution schemes. The Patents Bill will fill a gap in the legislation and is a good-sense, widely supported bill which was agreed to in 2020.

16:43

I understand it is the intention of the Government to introduce bills.

• Taxation (Budget Measures) Bill No 3, introduction
• Social Security (Modernisation) Amendment Bill, introduction
• Gas (Market Transparency) Amendment Bill, introduction.

The Appropriation (2025/26 Supplementary Estimates) Bill is set down for first reading immediately. The remaining bills in the urgency motion are set down for first reading presently.

on behalf of the Minister of Finance: I move, That the Appropriation (2025/26 Supplementary Estimates) Bill be now read a first time.

The question is that the motion be agreed to.

16:44

I present a legislative statement on the Taxation (Budget Measures) Bill No 3.

That legislative statement is published under the authority of the House and can be found on the Parliament website.

I move, That the Taxation (Budget Measures) Bill (No 3) be now read a first time.

This Government is committed to building a tax system that is not only fair but works for businesses and taxpayers. It should be simpler for businesses and individuals to navigate. It should have lower compliance costs and strengthen the integrity of the tax system.

The first item in the bill introduces a ceiling on donation tax credit entitlements. The charitable sector does a lot for the community, especially in tough economic times. We continue to support the work they do and part of that lies in ensuring that the policy settings are targeted to achieve the most value for money for the Government’s contribution through the donation tax credit. The credit aims to encourage and reinforce charitable giving. However, the Government’s view is that the current open-ended tax credit does not provide value for money. Research shows that the increase in donations as a result of the tax credit is likely to be lower than the cost of the tax credit itself. The bill therefore introduces a maximum entitlement of donations eligible for a donation tax credit to the lower of $100,000 or the donor’s taxable income. The vast majority of donors will not be affected. To be clear, this proposal does not stop people from donating as much as they like. It merely places a cap on the amounts that are eligible to receive a tax credit. This is about giving the donating public confidence in the system and helping to assure the future of charitable giving.

The bill also supports New Zealand’s aviation sector by exempting aircraft leases from the non-resident contractors’ tax. In the industry, and in the airline industry more specifically, operating leases have become more common owing to the global supply constraints and increasing global demand. It is a cost-effective way for New Zealand airline operators to acquire aircraft and aircraft parts, but our non-resident contractors’ tax is discouraging offshore aircraft suppliers from leasing to New Zealand. This is affecting the competitiveness of our companies. Affordable access to aircraft and parts is essential for economic growth and connectivity. If we lose access to aircraft passengers and freight, New Zealand and our economy will take a hit. That is why this bill makes a sensible change to exempt aircraft operating leases from the non-resident contractors’ tax. It’s about supporting more economic activity and encouraging more investment in our aviation sector, not discouraging it.

The bill also makes important changes to the rules around shareholder loans. We must always stay alert to the integrity risks in our tax system, especially when people are trying to avoid paying the tax that they should. Last year, Inland Revenue consulted on the growing number of issues of shareholders not repaying loans that they have taken from their own companies. While many loans are used appropriately, others can be used to strip assets from the company or generate other integrity concerns. That is why we are proposing that if a company is removed from the Companies Register, outstanding company loans will become taxable after six months. This strengthens existing rules that tax loans when they are forgiven by providing a clear and certain timing rule that will support tax compliance and improve Inland Revenue’s ability to collect tax. These changes will apply to companies removed from the register after 4 December.

The last set of changes amends and simplifies the Working for Families scheme. We want to make it easier for people to understand and to be clear on their correct entitlement. The rules for calculating the family scheme income currently are complex, making it difficult for many families to understand and apply correctly. Part of the application process requires people to calculate their family scheme income, which involves deciding whether a range of income adjustments apply to their circumstances. The proposed amendment streamlines these requirements by removing several income adjustments. It is about ensuring Kiwis who need support are getting what they are entitled to.

We are also proposing to simplify the residence requirements for Working for Families. All too often families moving overseas fall into debt because they have struggled to understand the residence requirements for entitlement to Working for Families. Currently, there are different requirements for the principal caregiver and for the dependent child, leading to inconsistent outcomes for families in similar circumstances.

We’ve proposed simplifying the residence requirements by requiring both the principal caregiver and dependent child to ordinarily reside and be physically present in New Zealand. This does not mean that people cannot travel; what it does mean is that families can travel overseas for up to six weeks at a time without affecting their Working for Families eligibility. Those travelling for longer and for specified situations, such as emergencies, will be able to seek an exception in order to continue to be eligible for those payments. This bill will strengthen our tax system. I, therefore, commend this bill to the House.

The question is that the motion be agreed to.

16:50

This Budget and this tax bill are, in some ways, more notable for what they don’t do than for what they do actually do. We’ve already heard around the Budget—though there were some interesting measures in it—that, in fact, those at the bottom of the heap are getting nothing from this Budget. In fact, they’re getting more pain. We know that’s coming through in subsequent bills. A whole lot of stuff has been announced, but there are also a whole lot of gaps in this Budget. Actually, it’s the same, in an odd way, with this tax bill.

Now, the Government announced a whole suite of tax measures today. It announced a whole set of changes around charities and not-for-profits, and that is sitting in today’s tax bill. It announced some work on the non-resident contractors’ tax exemption for aircraft leasing, and that’s in this tax bill. It announced some work on company loans to shareholders, and that’s in this tax bill. It announced some changes to the Working for Families scheme income, and that is in this tax bill. Then there was a whole lot of material—a whole lot of things—that the Government announced that’s sitting in the Budget announcements around taxation, and that’s now sitting on the excellent website that the policy team at the Inland Revenue have put together. There were to be some changes to the foreign investment fund rules that have been announced, but they’re not in this tax bill. There were some changes to the financial arrangement rules to support migrants, but they’re not in this tax bill either. There was some work on modernising non-resident contractors’ tax—not in this tax bill. There’s some work that’s been announced on the research and development tax incentive—not in this tax bill. There has been something announced around changes to fringe benefit taxes around vehicles—not in this tax bill. And they’ve announced some changes to the thin capitalisation rules for foreign-owned banking groups—also not in this tax bill.

That’s interesting that this Government has announced a whole lot of tax measures, but it’s not announcing consultation on them or anything like that, and it’s not putting them in this tax bill. Why announce those measures on Budget day if it wasn’t going to put them in the Budget legislation? That is, I think, a real gap. In previous years, the Government has put substantial tax measures into the Budget tax bill; this year, well, there’s some stuff in there but not a lot. It suggests that this Government might be starting to run scared of us on committee stages.

Then, I do want to talk about some of the issues that are in this bill. Now, at this stage, the four measures that are sitting in this tax bill—the four groups of measures—look fairly sensible. There are some issues around charity donations. I’d just note for the Minister of Revenue’s benefit, since he didn’t seem to know it at that stage, that tax credits for charities have never been open-ended; they’ve always been limited by an individual donor’s tax-paid income. Nevertheless, there’s some interesting work there. There’s some good work, some sensible work, on the aircraft leases. It’s sensibly removing a barrier around aircraft leasing that’s been creating problems for our airlines. There’s some interesting work on shareholder loans. These have been a way for shareholders, perhaps, avoiding—well, I certainly don’t want to say evading but certainly deferring—taxation to the point that it is not paid at all. We can characterise that with various words. There are some changes to the family scheme income—so changes to the way that the family scheme income is calculated.

At this stage, this party, the Labour Party, will be supporting this bill through the first and second readings, but come the committee stage there are some questions we do want to ask about all those measures and the impact on taxpayers, the impact on the Government’s fiscals, and some quite technical questions around some of the things which haven’t been done on them. For example, on the shareholder loans, I’m puzzled as to why addressing it has been done via the financial arrangement rules rather than via the dividend rules—that’s a choice but maybe not the best one. At this stage, we are supporting this bill, but we do know that this bill is a bill of gaps.

16:55

Tēnā koe, Madam Speaker. The Budget, obviously, doesn’t have a lot to console New Zealanders who are struggling with the higher cost of living and the fossil fuel crisis, and staring down rising unemployment over the next few years. We would have liked to see more than what has been announced. There’s certainly much more that we could be doing to help people through these difficult times.

This taxation bill has some interesting and very limited changes to the tax system. Overall, at first reading—and we only received this bill in the last hour or so, so we haven’t had much time to get across all of the detail—it appears that the changes are reasonable and marginally positive. They are a long way from, like, structurally making a fairer tax system, which we would like to see in the Green Party, but introducing a ceiling on donation tax credits seems very, very reasonable to us.

It was interesting just now—very quickly, trying to skim read the regulatory impact statements, which were only just tabled, so I only had the eight minutes of the previous speakers to look at them—but it did say that “The existing donation tax credit settings result in Crown expenditure of around $350 million per year.”—that is quite a lot—“The empirical evidence is mixed on whether such a tax credit is cost effective in encouraging charitable giving.” Personally, in my family, we participate in charitable giving, but we’d much rather see a lot of the core services that are excellently provided by charities being more directly funded by the Crown and not relying on the whims of those who happen to have enough money. We’re seeing charitable organisations that do really important work, helping people who are homeless—like the City Mission, the Downtown Community Ministry, and Kaibosh in Wellington—and there are heaps and heaps of charitable organisations in Rongotai and Wellington that do amazing work. They are all struggling because people are struggling with higher cost of living, unemployment, and reduced investment. That’s precisely the time at which those charities need more Crown funding, and I don’t think we’re going to find that buried in the Budget, but I do think it’s fair enough that we shouldn’t be spending that core money. It would be great if this $350 million—which, maybe, the Crown is going to get back by putting a ceiling on the donation tax credits—was going to charitable organisations and funding them so that they can help the people who are really struggling as a result of the Government’s policies. I doubt that’s going to be a line in the Budget. Again, we only just saw the Budget recently, so we’re still digging through it to understand it.

One of the other questions that we have in the Green Party, while we don’t have issues with most of the what’s proposed in this bill—the company loans to shareholders changes make sense, and the Working for Families changes seem, actually, kind of sensible and compassionate, and the aircraft leasing changes make sense—is that there are some amendments to the Student Loan Scheme Act 2011. It’s unclear what changes are being made just from the summary of the bill, so we’ll have to speak more to that in further debates today. Of course, we would expect, because this is happening under urgency, that there will be plenty of time in the committee of the whole House stage for scrutiny because, of course, this bill is not going to select committee to get the normal scrutiny that it should get in our democratic system.

So that is the Green Party’s position: support at first reading. We expect to have a fulsome debate in the committee of the whole House stage and be able to dig into everything that’s happening. Finally, I’ll just say, obviously, what’s lacking in this taxation bill are the substantial changes that are needed to create a fairer tax system in New Zealand, which would mean more revenue for productive investment in things that actually make peoples’ lives better, that support them in meaningful work that helps build our country, protect our environment, protect our climate, and electrify it, because all of that is common sense.

17:00

This is very exciting—my first speech in the Budget debate on the Budget bills. I want to thank Minister Watts for bringing this bill to the House: the Taxation (Budget Measures) Bill (No 3), no less. Look, it’s going to be very exciting to work through this bill in all stages. Let’s get these changes in place. The Minister’s already outlined what they are, but alongside this, this really is fixing what matters on this side of the House in Government. There have been some other great announcements around simplifying the fringe benefit tax rules. That is going to help tradies and small businesses across New Zealand—very, very exciting. For foreign investment funds rules—again, announced alongside this—time and time again, we’ve heard about how they are actually holding people back, and so the change of lifting the threshold, which has been announced alongside this, from $50,000 to $100,000 is excellent. I want to congratulate the Minister on all of the measures he’s put through in this Budget, and I commend this bill to the House.

Can I just remind members, before the member starts, that this is the taxation bill. It’s not a general Budget debate speech. Thank you.

17:01

Yes, and we’ll be talking about tax. Taxation (Budget Measures) Bill (No 3) 2026—thank you, Madam Speaker. The Government is looking to operate a predictable revenue system, and the current main tax bases—personal income tax, company tax, and broad-based taxes—are already the main income earners for us. In a situation where we are attempting to return to surplus and rebuild the economy, we’d just like some of the people that are maybe still with us looking at Parliament TV to kind of be aware of what the alternative is here.

So far, we have a policy-free zone from across the aisle. The only thing they’ve come up with is a capital gains tax, where they’re going to turn that into—what are they? Hospitals, private—what is it? [Interruption] Anyway, it’s completely incoherent. And then, across this side, we’ve got the approach to killing innovation and taxing success, otherwise known as the “Green envy taxes”. The Taxpayers’ Union, not usually our friends necessarily, but boy they’ve done a good piece of work here.

Point of order, Madam Speaker. Far be it for me to suggest to the Chair, but I think, when we have a Government member waving around documents from another party, we’re far from the bill being debated. You can sit down.

Actually, that’s my call. Before the member stood up, I did remind the House that this is a taxation bill—it’s not a general Budget debate opportunity, so please return to the bill.

Thank you, Madam Speaker. I just wanted the public to be aware of what they’re up against here, so the alternative has been outlined.

Anyway, thank you. I join with my friend from the ACT Party in approving of getting rid of the fringe benefit tax for tradies. Fantastic little bill, and we’ll have more to say on all the other parts of the taxation bill as we go through this process. Thank you, Madam Speaker. [Interruption]

The—[Ryan Hamilton stands] Wow. That was close. I had my—

Sorry, Madam Chair. So much noise. I commend this bill.

I actually hadn’t called you, Mr Hamilton. I’m sorry, there was a lot of noise going on. I call Ryan Hamilton.

17:04

Oh, thank you, Madam Chair. Look, this is a great bill. It’s some simple tax hygiene, some incentives for leasing of vehicles, leasing of planes—a huge opportunity. I commend it to the House.

Thank you, Madam Speaker. It is my pleasure to take a call—the first of many, I’m sure—on this Taxation (Budget Measures) Bill (No 3). Nothing screams budget legislation like kicking off with a piece of tax legislation.

Now, what we do know are the things that this bill is going to do. It’s quite a narrow piece of legislation and, as my colleague Hon Dr Deborah Russell indicated, at this stage, on the surface, these are things that Labour can get behind—the things that are done in this tax bill. But we will also have some questions as we go through these changes, as we go through the various stages of the bill, which is what you would expect.

So what we do know: the outstanding loans from a company to a shareholder as taxable income of the shareholder six months after the lending company is removed from the register of the Companies Act 1993. That is not an uncommon situation where you do have companies having outstanding loans to shareholders, and making sure that we’ve got the legislative provisions right in terms of our tax legislation regarding that is something that we do need to cover off.

Charities—and this is introducing a donation limit of $100,000 per annum. As my colleague Deborah Russell pointed out, there has always been a cap, but this is about increasing it for natural purposes claiming a donation tax credit. The change increases the tax received and the cap reduces the donation tax credits paid out. One of the things that we really want to interrogate when we get to this part of the committee of the whole House stage is whether or not this might reduce the amount of money that is being donated to charities.

This is a very important question for us on this side of the House, because what we do know, with a lot of other measures that are coming in through this Budget that are going to disproportionately make some of the most vulnerable people in our communities even more vulnerable, is that never before in our history are our charities going to be so called into action. We’ve had a release today that homelessness is at the highest point it has ever been in our history, and the role of charitable organisations, when the Government is missing in action, has never been more important. This provision around any changes to the tax treatment of charities is something we will be interrogating with a great deal of scrutiny, because, if we were to put any kind of handbrake on people donating to charities in the current context that we’re in, New Zealand would be in an even more precarious state. The people who are made even more vulnerable by today’s Budget would be put in an even more precarious state. So that’s something that we will be looking at.

There’s stuff around membership subscription and levies, and there’s also stuff about increasing the effective tax-free threshold for smaller non-profits, and that’s increasing the effective tax-free threshold for not-for-profits from $1,000 to $10,000. Given that this threshold hasn’t shifted since 1979, there’s probably an argument that it probably is time to have a look at that threshold to see if it does need some movement. Again, this shows that we know, for so many of our not-for-profits that are doing good work, that this will make a significant difference not only in the amount of tax they pay but, actually, in the compliance. So if that threshold is lifted, they won’t have the compliance that goes with needing to pay tax.

But as my colleague did indicate, there are a number of tax changes that were announced in the Budget today that are not included in this tax bill that we have that accompanies the Budget, and we’re interested to know why, so just signalling to the Minister of Revenue that we are going to have some questions. For example, the changes to the research and development (R & D) tax initiative. Now, I can understand why in-year payments aren’t in this bill, because you can do them already. It’s just reannouncing something that has been the practice for a number of years in terms of making available to innovative companies their R & D tax credit so that they can put that back to work in their business; so I can see why the Government isn’t at haste to change the law about that, given it’s already happening.

But I am interested that, given that they want mining companies now to be able to claim any of their R & D tax incentives, that’s not in this Budget. Why is that not in this Budget and when is the Government planning to make the changes in order to do that? Because this is the only opportunity we get—[Time expired] Oh. I wanted to go longer. You could’ve given me longer!

Actually, I was so engrossed I missed the clock myself.

17:09

This is a good bill. Let’s get it done. I commend it to the House.

17:10

Reo Māori. E te Māngai o te Whare, otirā koutou katoa kei ō koutou kāinga maha, tēnā rawa atu koutou katoa. E tū ana awau ki te kōrero mō te Pāti Reipa i runga i tēnei pire, arā te pire e pā ana ki ngā take tāke.

Māmā rawa atu te kite kāore rawa atu tēnei Kāwanatanga e paku mārama ki te ao tūturu e pā ana ki te iwi Māori, e paku mārama ki te ao tūturu e pā ana ki ngā tāngata puta noa i a Aotearoa.

[I will speak in the Māori language. Madam Speaker, and everyone in your various homes, I greet you all. I stand on behalf of the Labour Party to talk about this bill; that is, the bill relating to tax issues.

It is clear to see that this Government does not comprehend in the slightest the real-world issues relating to Māori, does not comprehend in the slightest the real-world issues relating to all people in New Zealand.]

It’s my pleasure to rise on behalf of the Labour Party to speak on the taxation bill. At a time where we know and we are told each and every day that the number one priority for people across Ikaroa-Rāwhiti and across Aotearoa is the cost of living, this Government have elected to make their first matter of business, post-Budget, a taxation bill that has very little relevance to what the people, my Electorate and Community Office (ECO) staff, and the staff of many MPs around Aotearoa are getting every day.

While my learned colleagues before me have advised that we are supporting this bill through to committee stage, it must be acknowledged that very few people in Ikaroa-Rāwhiti and very few people in Aotearoa are contemplating making donations over the threshold of $100,000. People across Aotearoa are contemplating the 30 extra dollars a week they need to find to keep roofs over their heads. They are contemplating why, at the moment, there are more cuts impacting their families.

Another thing: the Hon Dr Deborah Russell, in referencing the aircraft leases, said that it’s sensibly removing some barriers. But once again, no one in my electorate has come to me and said, “I’m having issues about all these aircraft parts that I’m leasing. Can you do something to help me out?” Not one—[Interruption] shock, horror from that side—of my constituents has said, “Hey, Cush, all these aircraft I’m leasing, I need help.”, and yet, this is the first order of business for this Government. How out of touch.

How did you get here?

Probably on an aircraft you lease—probably on an aircraft you lease. I’ve just been asked how I got here—ha! Yeah, you should catch it home.

Back to the bill.

For the whānau watching, you can’t hear, but the interjections from the opposite side are longer than the speeches they make in their contributions. Again, an indication of the value they put on what matters to constituents around New Zealand.

Yeah, yeah—this is filibustering. Go on.

Sorry? You can wait your turn. You’re going to get time—and we’re going to get time to debate this further.

Wait for your 10 seconds.

Wait until you get your 10 seconds! So, yes, this is the first point of business.

Working for Families—again, that is actually something that comes up consistently throughout my ECO offices, throughout Ikaroa-Rāwhiti. Between Wainuiōmata and Rangitukia up the East Coast, Working for Families is something that comes up every day. Of course, simplifying that process will actually have a direct impact on families throughout Aotearoa who vote and put us all here. But I must reiterate, at a time when we’ve had cuts to Kāinga Ora; at a time when we have had cuts to Māori-specific education initiatives; at a time when we’ve had cuts to Te Puni Kōkiri; and cuts to services that directly impact Ikaroa-Rāwhiti and communities around Aotearoa, this Government is choosing for their first matter of business, post an underwhelming Budget, to discuss a taxation bill that will have very little real impact on the lives of the majority of Aotearoa.

So while we do support this bill through to committee stage, I must make those points. Tēnā koe.

17:15

In these days of unprecedented global uncertainty, this bill will join the rest of the bills that this Government will be delivering to fix the basics and build a future for all New Zealanders. I commend the bill to the House.

This bill is set down for second reading immediately.

I move, That the Taxation (Budget Measures) Bill (No 3) be now read a second time.

I’d like to thank the House for considering this very important bill under urgency. One of the reasons for urgency is that the measures contained in this bill will help Kiwi families understand their Working for Families entitlements better and help them avoid debt during these tough economic times. Although the Working for Families amendments would only come into effect from 1 April 2027, Inland Revenue needs to have enacted legislation in place by December in order to ensure the correct system changes and procedural steps are in place to prepare to allow families to begin enjoying the benefits of the change by 1 April next year.

As I outlined in my first reading speech earlier, the detail of these changes will benefit the families who need them most. What matters now is progressing this bill so that the support can reach Kiwi families without any further delay. Kiwis who are feeling the pinch deserve a Parliament that responds with urgency when they need it most.

I would like to acknowledge my Inland Revenue officials for the stellar work they have undertaken during the Budget process, including my ministerial staff in my office. Therefore, I commend this bill to the House.

The question is that the motion be agreed to.

17:17

Thank you, Mr Speaker. Ordinarily, at this time in the progress of a bill through the House, we would have had ample time to discuss the bill at select committee. Now, I absolutely understand that things differ when it comes to the Budget, and, in particular, there can be items in the Budget which need to go through fairly immediately because of the impact on markets, the way it might change people’s behaviour, and so on. So, some of the time, we absolutely need to be sure that we just keep on moving with a bill. We haven’t had the opportunity, therefore, to discuss a number of these measures. We also haven’t had, I guess, an explanation as to why each of these measures needs to go through under urgency as a Budget measure, and that’s certainly something that we’ll be talking to the Minister of Revenue about, but it’s not clear that this bill was even needed on Budget night. Maybe the Government felt it ought to have something to legislate for on Budget day otherwise it was just not a very good showing, but it’s not clear to me, for example, as to why any of the measures that are in this bill couldn’t have gone to a select committee for at least some discussion. I think there are possibly some items in the measures that have come before the House that could be tricky.

Just to go through the measures that are sitting in the tax bill in terms of some of the tricky issues: now, with the charities, for example, the Government has elected to cap the tax credit for charities—not the credit itself, but the amount for which one can get a tax credit—at $100,000. Now, that’s an interesting move, and as the Minister correctly points out—[Interruption]

Could members down there please keep it down. You’re distracting the speaker.

Thank you. As the Government correctly points out, people are still welcome to give more to a charity; they’re just not going to get the tax credit for it. That’s an interesting way of tackling some of the problems that we’ve seen in recent years around charities, notoriously with the Wright family and the alleged charitable transaction they engaged in with re-setting up the financial structures around the Best Start childcare centres. Under this particular change, they certainly wouldn’t get a tax credit for what they had done, but that kind of mechanism would not be ruled out by these particular changes. There’s still a little bit of a gap in the charities law there. Now, again, of course, eventually the Wright family was caught, I think, by section GB 1, and so they did end up having to pay the tax, but there was some pretty interesting stuff that went on there. This is all on the public record—it’s absolutely on the public record. There are just, sort of, issues that still need to be examined there, and we could perhaps have discussed them at select committee.

In terms of the shareholder loans, there’s a particular mechanism that has been chosen here around how shareholder loans—again, it’s a mechanism whereby shareholders, particularly of very small companies, could make loans to themselves as shareholders or to associated parties and, as I said previously, defer any tax on it in such a way that the tax was never paid.

Back to the bill, Deborah.

Now, the mechanism—this is in your bill, Minister. The mechanism which they have chosen is to use the financial arrangements rules for these shareholder loans. But, of course, the financial arrangements rules only apply to arrangements over $200,000. Now, perhaps there is something sitting in this legislation that works around that particular rule. It’s something that we could have examined at select committee, and we will certainly want to ask the Minister about it at the committee stage.

In terms of the changes to the family scheme income, given that we have only had access to the bill itself for a couple of hours—it was circulated earlier—and then we have only just now had access to some of the analysis from Inland Revenue, which is generally excellent, about the bill, I don’t know exactly how those family scheme changes will actually work yet. They’re adjustments mostly, in the first, to the residence of a person, so we’re going to judge it by actual residence in New Zealand rather than by tax residency. That looks like a sensible move to me, but in terms of the calculation of family scheme income, that’s important. The more family scheme income a person has, the less they get of the Working for Families tax credits. That’s sensible; the more income one has, the less assistance one might need from the State, so you want those things to change around. But there’s some interesting changes in there around the income equalisation rules and how they are counted for the family scheme income—could have talked about that at length at select committee. Again, that’s going to be something—to, I’m sure, the Minister’s great enjoyment—we’re going to dig into at the committee stage for this bill.

There’s lot of work that we still need to go through for this bill, and, alas, I anticipate we’re going to be here for several hours doing that.

Oh yes.

Ha, ha! However, what I do especially want to go back to is, as I said, not so much what is in this bill. The measures that are in this bill, we think, at first reading—or the second reading now—we can sensibly support. They look, on the whole, to be sensible measures and measures that we can support. However, we’ll reserve our final call on that for after we’ve worked through the committee stage.

It is the measures that are not in the bill, or the measures which the Government announced today—said they were great measures, talked about them in their Budget materials, and had material up on the Inland Revenue website about it, but those measures have not been included in the tax bill. I’m talking about the measures such as the changes to the FIF—the foreign investment fund—rules. Now, they promised in the analysis that’s on the Inland Revenue website there that they would be looking to extend the recent revenue account method changes to the FIF rules to all FIF taxpayers. It looks like quite a good move. But if we’re going to put these types of measures—which are not time-sensitive, except for maybe the family scheme rules—into the tax bill, why not that measure?

They announced today a set of changes to the fringe benefit tax rules—some particularly interesting changes around how we calculate the use of vehicles for fringe benefit purposes. Now, having spent quite a bit of time teaching my students how to manage those calculations for vehicles—and it was fearfully complicated—the particular set of changes that the Minister has said he’s going to put through look pretty good. So why not have them in this bill now—why not now—along with all the other things that he’s putting through here that could have done with some time in select committee? Now, maybe there’s some consultation—more consultation needs to be done around that—but why not in this bill? It could have been done.

There’s a whole set of measures that have been announced today, which the Government has taken credit for today, and which are not in this bill; and, conversely, opposed to that, it’s not clear as to why these particular measures that are in the bill needed to be in here. It’s not clear why the charities measure needed to be in this bill. Why do we need to go into urgency? Why do we need to spend our time here all through Friday and on into Saturday debating this bill when it need not have been done? It could have gone through an ordinary tax process.

Those kind of unexplained absences are, in fact, I think, emblematic of this Budget as a whole—this Budget that doesn’t do anything for the ordinary people of New Zealand; that doesn’t help out the people who are doing it tough at the moment; that, in fact, looking at some of the legislation that’s coming down the track, actually makes things harder for some of the poorest people in New Zealand. My leader today characterised this not even as a “Robin Hood” Budget. It’s a Budget that kind of makes things work by making things worse for the poorest people in the country. That’s shameful. A tax bill of gaps, just like this Budget of gaps.

17:27

Kia orana, Mr Speaker. I rise to take the second call on the debate on this bill—first one in the second reading. This bill is not huge. Ironically, in the first reading speeches, we had Government coalition members who were speaking about tax initiatives announced in the Minister of Finance’s Budget speech that are not contained in this bill at all. In fact, that was the only thing the ACT member Todd Stephenson referred to and the only thing the New Zealand First member Dr David Wilson referred to, other than waving around some propaganda from a fake union charity. Then the Government members, basically, didn’t take calls. It’s unclear if any of the Government members, aside from the Minister, know what’s in the bill or are obviously not going to contribute to the debate around it. It is Budget night. They’ve got a lot of bills they want to ram through. They know that the Opposition is going to try and apply scrutiny, as is our role in a democratic system. The fact that these bills are bypassing the select committee process means they will not be subject to much scrutiny.

So that’s what’s going on, if anyone at home is watching. We’re debating a bill that we only just saw about an hour or two ago. Just for the benefit of Government members, the bill does not contain any changes to fringe benefit tax nor any changes to the foreign investment funds, but it does contain changes to the amount that one can claim as a donation tax credit. It does make changes to Working for Families, and it does make some changes to the student loan scheme, which seem to be pretty inconsequential and related to the Working for Families changes, but we still need a little more time, and we’ll probably dig into that during the committee of the whole House stage, which will come up after the dinner break. It changes treating outstanding loans from businesses to shareholders as income when the company goes into liquidation, and we feel that is a fair income tax on those people.

Limiting the donation tax credit to $33,333 per financial year will really only affect the wealthiest people. We have seen, and it was in the regulatory impact statement, that there are issues with the donation tax credit being misused for aggressive tax planning, or—what’s the word for it? It’s not tax avoidance; it’s, like, the legal thing you do—tax minimisation? The legal thing super-rich people do when they’re greedy and they don’t want to contribute their fair share to our beautiful nation.

Everybody does tax minimisation.

Oh, here we go! Dan Bidois say’s everyone does it—everyone does tax minimisation. That absolutely expresses the values of the people who are currently in Government. They think it’s a good thing to be greedy and to not give forward and contribute to our beautiful country. That’s what they stand for: not paying their fair share. To be honest, I donate a lot to charities, and so does my partner, and we never, ever, ever claim the tax credit. Why? Because we actually want to pay tax, because we actually believe that—why would we bother with going through this paperwork to try and save some money when that money is money that can contribute to things that we all buy together?

That is the fundamental difference in the worldview of people in the Green Party and people in the Government parties. They don’t believe in public good—they do not believe in public good, unless it’s a motorway. There’s 100 percent socialism for highways—they’re very happy to throw that on the credit card and make future New Zealanders pay back their insane highway plans, but when it comes to paying our public servants to do important work to help people that is the most important, they’re against it.

This is off track.

I think it is all very relevant to my speech. I say to the Government speakers—who are all welcome to take a call and speak about the detail of this bill—I’d love to hear you take a call. Other than Minister Simon Watts, no one is taking a call.

You don’t give this speech in Seatoun.

Seatoun—we’ve got Government members referring to my beautiful electorate, Rongotai. It is wonderful, and there’s a lot of people there who used to vote National. They don’t anymore. A lot of people in Rongotai used to vote National—who won the party vote?

Can I ask members not to conversate across the Chamber, and just a reminder that interjections should be rare.

And pithy, right, Mr Speaker? Witty?

Rare and pithy—pithy would be helpful.

Apologies, Mr Speaker, I did get sidetracked—that was my fault. I got sidetracked by the interjections and heckling from the Government benches, so I’m going to come back to this bill, which is one that we’re going to support, but we’re going to have to dig into the detail at the committee of the whole House stage because this is not going to a select committee.

Going back to the issue around tax credits for donations: what it says in the regulatory impact statement is that “the donation tax credit can be misused for aggressive tax planning … [and] donors can receive tax credits well in advance of funds being applied to charitable purposes or derive private benefit (for example, through loans received back from the charity). Inland Revenue has observed an increase in such behaviour, which may be facilitated by New Zealand’s comparatively generous settings.” I think that’s interesting. I think IRD has done a good job here, and I commend Minister Watts on bringing some sensible changes to the House on Budget night, which might limit the cost to the Crown.

We want that public money to be going to the genuine, public good purposes. That brings me to the other side of this, which is, as Labour members—I think it was the Hon Megan Woods—mentioned during the first reading speech, that there could be some concern that this will discourage charitable giving, and that charitable giving is needed now more than ever because the Government has been cutting funding to things like food banks and other core, public good purposes that are carried out by charities. I work with many of these charities in my electorate, Rongotai, in Wellington Central, like DCM—that’s the Downtown Community Ministry—who do some of the most important work dealing with the people who have it the toughest. They’re people who have mental health issues, trauma, substance abuse issues, who might be homeless; we’re trying to get them off the street and we’re trying to help them. I went to a beautiful chess day—they have a chess day once a year in Wellington—and played chess, and it was a fantastic opportunity to engage with people who, honestly, are living life in a much more precarious way than I am, and my family. I’m so lucky.

One of the things I would like to see is core Crown funding from a fairer tax system that is raising more revenue from those people who are trying to minimise their tax, and actually investing that in those core services that protect people; that means that people are fed; that they’re getting the support services they need to deal with trauma—some of that trauma maybe came at the hands of the State in State care—that they are getting the treatment that they need to get off the addictive substances. All of that has to happen in a context where they have both safe, warm, dry, affordable homes—like a home they don’t have to pay for, a Housing First home—and they have access to those social support services.

We love the work that many charities are doing; we don’t want to see charitable status used by the ultra-wealthy to minimise their tax and to avoid contributing to things that are in our public interest and common good. Because those people, they could be any of us. People fall on hard times. Maybe they were born in a situation where their parents had suffered trauma, they suffered trauma, maybe at the hands of the State as a result of colonisation, and they just need some help. That could be any of us—that could be any of us.

The difference is that those members opposite, they like to believe that people in bad circumstances are there because they are bad, and that somehow those people pull themselves up from their own bootstraps thanks to their $200,000 loan from their parents to buy their first home or whatever it is. The world is not fair, but we can make it fair—the world is not fair, but we can make it fair, and this bill is just the tiniest, tiniest little move in the right direction, some little tweaks around the edges from this tax bill. We could be doing so much more on this Budget day, and we will next Budget day.

17:37

I’m glad to rise and take a call, and I’d like to speak to the virtues of allowing overseas aircraft to be used in New Zealand in a sensible way—especially for the good people of Ikaroa-Rāwhiti, where they will now be able to get their produce to the world, jobs; they’ll be able to import produce, fish, anything that needs to get out. They’ll get the money for that, they’ll be able to buy stuff in, and I’ll tell you what, the tourists will come in, there will be jobs, there will be improvements, all thanks to this Minister of Revenue. Thank you.

Just to note that everybody’s really excited—it’s the Budget—but try not to talk across the Chamber. There are two hallways where you can have a chat.

I might attempt something that’s maybe a little more dull, but not to everybody. I just want to congratulate my colleague Dr Dan—Dr? OK, you’ve been lifted up, Dan Bidois—for all the work that he did in the Finance and Expenditure Committee in trying to get the new part of the Reserve Bank of New Zealand, the prudential committee, under way.

In this bill we’re talking about a new prudential levy on banks and other financial institutions that will support the function of this prudential oversight. If we flip across now to think about company loans to shareholders, this is exactly the type of thing in the outcome of that good work where we are able to take that Reserve Bank and the prudential committee to look at those things and provide us oversight for them. I welcome the debate on this particular part of the bill for the rest of the night.

I’d also like to just congratulate many involved here, including ourselves—you know the old John Maynard Keynes saying that “if the facts change, I change my mind—what do you do?” Well, fees-free for tertiary—yep, facts change. We found out, really, that wasn’t so great. Doubling Trades Academy? That’s right in our lane. Thank you very much.

17:39

Thank you, Mr Speaker. I would like to note how excited the House is about a bill that everyone is actually supporting, technically, and how much argument there has been across this particular bill, even though we’re all actually voting for it. The Greens, as my colleague Julie Anne Genter has already articulated, will be supporting this bill.

I was actually in the Budget lock-up earlier today, at 1 p.m., and it impressed on me the need to actually read what’s happening on this bill and read the Budget really carefully, because I’m hearing speeches from members during the appropriations debate, and now during this debate, and they’re saying all sorts of things that aren’t actually supportable by the evidence. Look, the members opposite like to accuse the Greens of wanting to defund the police, and they’ve bragged about how much they’ve increased police funding in this current Budget, but if you actually look in the Estimates of Appropriations, if you actually look at the line (M51) (A28), if you look at the policing services, there’s actually been around a $50 million cut to policing. So this coalition is actually defunding the police. It’s richly ironic, and they’re not giving the police the pay rises that they need.

Look, back to this bill, and I really appreciate how my—[Interruption]

Can we keep the chatter down? It’s getting difficult to hear the speaker. But just as a reminder, this is the Taxation (Budget Measures) Bill (No 3), and so it would be good to focus on that.

Yes, Mr Speaker. I was returning to the bill, and I wanted to thank my colleague Cameron Luxton for mentioning the aircraft tax changes. He said that he was going to explain it, but, unfortunately, he didn’t actually explain what the changes meant to the aircraft leasing situation. I’m hoping he will elucidate on that during the committee of the whole House, because it really is unclear to me what the changes are actually doing. Like, I have to admit to you, Mr Speaker, I’m not quite sure what dry leasing is. I would love to hear an explanation of what dry leasing is from the member, or maybe the Minister of Revenue, during the committee of the whole House stage.

That does bring up another question, and this is a question that’s already been raised by my colleagues and comrades in the Labour Party, which is: why bring this bill under urgency? I mean, it does make some good changes. We don’t dispute that. We appreciate the helpful, minor tinkering it does around the Working for Families scheme. Those are all good, positive changes. But why rush it through under urgency when it could have been done through a normal select committee process? It just speaks to the wider trend and the wider thread of this Government, which has really used urgency quite a lot during this term, the most out of any Government, I believe, according to an analysis from Newsroom—

More than the last 40 years combined.

More than the last 40 years combined, according to my colleague Tamatha Paul.

I wanted to also return to what this bill does and doesn’t do. I’ve already described it as “helpful tinkering”, and I stand by my description of that because helpful tinkering would be fine if we weren’t in the middle of the biggest fossil fuel crisis that we’ve ever had, if we weren’t at the highest level of unemployment we’ve ever had, if we weren’t facing an explosive cost of living situation—helpful tinkering would be welcome. The reality is that helpful tinkering isn’t enough and it doesn’t meet the gravity of the situation. It’s not what New Zealanders actually expect. It’s not something that meets the current moment.

I want to really emphasise the desperation that I see and that me and my colleagues see across the community at the moment. Just a month ago, or maybe it was a couple of months ago, it was really sad, but it was also a privilege at the same time, to be launching a report on the reality of student poverty today. In that, it showed that student food bank usage in Auckland had quadrupled since 2022, and doubled in Dunedin since 2022. The helpful tinkering that it does do here, including changes to the student loan scheme, isn’t going to help these students. In fact, the wider changes that the Government has made around the Budget to the Fees Free scheme that was articulated by the previous speaker is actively not going to be helpful.

So, yes, even though we do support this helpful tinkering around this bill, we do wish that it was more ambitious. Thank you.

17:44

I’d like to use my time in this second reading 10-minute call, to say that I look forward to deliberating further in committee of the whole House.

Nothing says centrepiece Budget legislation more than the chair of the Finance and Expenditure Committee, Ryan Hamilton, taking a two-second call on the first piece of legislation that has come to the House.

Now, it is hard to believe we’re at legislation piece No. 1—the piece where there should be Government members fizzing with pride about the legislation that they are bringing to the House, to implement a Budget they can get behind. Collectively, besides the Minister of Revenue, there has been less than two minutes contributed by Government members. That’s how proud they are of the legislation that is coming to this House: they can’t even talk about it; it’s not even something they can muster more than a sentence about.

And this is the centrepiece legislation. This is the first piece of legislation that’s been brought to the House in this Budget that sets the story of what a Government is doing, because Budgets sell a Government’s vision. Buried in those lines, and in every one of those spreadsheet line items, is the vision of a Government. What we have here could be best be described as a hodgepodge omnibus bill. This is not a bill that gives any vision; this is something that was quickly thrown together because someone in the Prime Minister’s office panicked and said, “Oh my God, we’ve got no legislation to bring on Budget day. There’s nothing there. There’s nothing that we’re actually doing. Someone, quick, find some legislation.”

What have we got here? We’ve got the bill, and the tax exemption for aircraft asset leasing seems to be becoming quite a focus of it—the dry leases for asset leasing. Now, obviously, my colleague Cushla Tangaere-Manuel is going to have many questions on behalf of the people of Ikaroa-Rāwhiti, because a point she makes very well is that it may be—as Cameron Luxton can claim—so produce can get out of the East Coast, but the problem she highlights is that there’s no funding for the roading to get that produce to the airports to get it out of the East Coast.

The question this Government will have to address is why—[Interruption]

Members—members, interjections: rare and infrequent. I don’t want a barrage of commentary from this side of the House. And if you’re going to do an interjection, at least make it funny, mate.

Well, Mr Speaker, I think some of those members should use their pent-up energy and take a call. They should actually get on their legs and say something about this centrepiece legislation that they have such pride in; obviously they want to. The whips should let them off the rein—let them take a call and have a say on this legislation.

We are supporting this, but the question we have for the Government is: why is this taking such a priority? When we look at the material that the Inland Revenue (IR)—and the Inland Revenue puts out a lot of very good information with the legislation that it introduces. It tells us that the current settings, “When a New Zealand business leases assets … it typically has to withhold non-resident contractors’ tax if the lease income is taxable in New Zealand.”—now, reading that out took the tone down; I noticed that. It’s a way to soothe the House: read out IR advice.

The question is: why is it only applicable in this very narrow set of circumstances. What is the thinking of the Government behind it? What is the vision? What is the story they’re trying to tell New Zealand about what they see for New Zealand?

One of the other changes in this legislation, which we’re picking through with the information that has been laid on the Table, is changes to the charitable donation tax policy settings. This is one we do have serious questions about. As I indicated in my first reading speech, there has never been a time when New Zealanders are relying on charity more. We want to make sure that this is not going to have a dampening effect on people giving to charity; that on a day when it has been announced that New Zealand has the highest level of homelessness in its entire history, down to this Government’s policy settings, we’re not also going to damp down on what they are increasingly relying on, which is charities.

When I look through the regulatory impact statement, and we’ll be going through these in very fine detail, I do see on page 13, paragraph 41, “Owing to Budget convention, no direct public consultation has been undertaken on the problem definition, the proposed options, and the preferred solution.” Not only has the problem definition not been tested but we haven’t tested the proposed options, and we haven’t tested the proposed solutions. The question is: why aren’t these going to select committee, even if it was only for a few days? I would genuinely be interested to have a talk to our NGOs, to get the read from a number of charities, about whether or not they perceive this as being a problem. I do not understand why it not going there.

One of the other changes that this law is making is improving taxation of loans made by companies to shareholders. The regulatory impact statement, in diagnosing the policy problem here, has some very interesting information. One of the things that the Inland Revenue data is showing is that, for the income tax year ended 31 March 2024, 119,000 companies were owed nearly $29 billion by shareholders who were natural persons or trustees. This is a staggering amount of debt that is being lent to companies in this way, and there is actually some good information in this regulatory impact statement. I imagine we’ll be hearing from the Minister a lot, when he’s in the chair, about what the ill is that this is trying to put right, and making sure we’re not creating loopholes where loans are being used as a form of tax avoidance. When we consider $29 billion of finance going in through that route, it is a problem that we need to turn our mind to. Again, I ask the question: why under urgency? Why is it a piece of the Budget legislation? And why are we not testing something as important as this through a select committee process? This, to me, seems like an important issue that this Parliament should absolutely be turning its mind to, and that we should be doing that, and we should be making sure there is robust questioning—that we’re pushing the problem around and considering it, because it is a serious issue.

The other issue that we have been raising through this is that, by convention, when tax changes are announced in a Budget, they’re legislated. Now, there are a number of tax changes that have been announced today that are not being legislated; they’re not in here. The New Zealand First member Dr David Wilson took a call and talked about the bank levy that’s being introduced. It’s not in this legislation. We don’t have legislation for that, and that is a real question: why is that not there? When is this money expected to come in? Is it because it got caught up in such coalition friction that ACT stopped anything meaningful happening with it? Is this the reason why we’re not seeing legislation? They couldn’t even get it through the Cabinet process in that way?

What is truly puzzling is that you have changes to fringe benefit taxes announced and we’re not seeing those legislated in this omnibus, hodgepodge piece of legislation, which is throwing together the way in which we deal with the taxation of dry leases on aircraft, along with changes to how we calculate when a person is away and whether a volcano is stopping them from getting back to the country! We are also looking at charitable donations. Why wouldn’t you put fringe benefit tax changes in here too? The question we will have for the Minister is: what is the timeline? We don’t know when that legislation is coming. Are people going to change their behaviour? The reason we have the convention of legislating tax changes and their being well signalled is so that there is no retrospective treatment of them and that people can start to get their house in order and start to work within those rules. For the Minister: like, with those changes around the vehicle mainly for private use, the vehicle for business use, and the number of permutations that go through that—where’s that going to come through?

As I said, I can understand why the R & D tax incentive, in terms of the cashing out of that, is not being legislated, because you can do it already, but when are they going to extend this to mining, which they announced today? It’s not in this legislation. There are a number of things. There is the non-resident contractors’ tax modernisation, the financial arrangements to support migrants, and the foreign investment fund changes. Now, I know this is something that the Government has had many people asking it to change. These are questions we will be asking as this bill progresses.

17:55

This bill makes practical and sensible changes to our tax system. To the previous speaker, the Hon Dr Megan Woods, who just sat down: it’s coming; the fringe benefit tax legislation is coming later this year. Watch this space. I commend this bill to the House.

Tēnā koe e te Māngai o te Whare, otirā, tēnā anō tātou katoa.

Kei te tūmeke tonu awau ki tēnei āhuatanga. Ko tēnei te kaupapa mahi tuatahi o tēnei Kāwanatanga i muri i tō rātou pūtea i tēnei tau. Ahakoa ngā taumahatanga o ngā tāngata, ngā whānau puta noa i a Aotearoa, ka tīmata rātou i tēnei pūtea i roto i ēnei āhuatanga, arā, ngā kaupapa tāke.

Ahakoa kāore te nuinga o ngā tāngata o Aotearoa e paku aro ki ēnei āhuatanga, kei te aro nui rātou ki ō rātou ake pūtea, ki ō rātou ake kāinga, ki ō ratou ake hauora, ki ō rātou ake mātauranga, ki ō rātou ake tamariki, mokopuna, kuia, koroua hoki. Heoi anō rā, i tēnei wā, ka huri au ki te reo tuarua.

[I am still shocked at this circumstance. This is the first task of this Government after their Budget this year. Despite the hardship of the people, of families throughout New Zealand, they start with this Budget and this issue—tax issues.

Even though the majority of New Zealanders pay heed to this issue, they are focussing largely on their own budgets, homes, health, education, children, grandchildren, and the elderly. However, at this time, I will change to the second language.]

Once again, I reiterate that I am shocked that this is the first matter of business for this Government while whānau across Aotearoa are struggling. Heoi anō, I want to revisit the removal of barriers for aviation companies.

As I said, we do support this bill to the committee stage. There are those of us who live in the regions, and there are many of us across the House, naturally, who want to remove any barriers that can fly people to regions across Aotearoa—for me, the airport being beautiful Tūranga-nui-a-Kiwa Gisborne. Gisborne takes us to some of the most beautiful parts of Aotearoa, as we all have in each of our respective centres of the universe.

Do you know where else Gisborne takes us, Mr Speaker? State Highway 35—State Highway 35 that was not mentioned in today’s Budget. We talked about resilience. We talked about connectivity. The member opposite, Cameron Luxton, wants to talk about all the amazing produce getting out of Ikaroa-Rāwhiti. Well, how about thinking about all of Ikaroa-Rāwhiti, not just the ones you know? Think about the ones you visited recently who are cut off and remain vulnerable every day, not just so that they continue to contribute to this economy, which we know is thriving—the Māori economy is thriving. Think about that before you go around purporting to understand Ikaroa-Rāwhiti in its fulness. That’s a positive: removing that barrier from the aviation sector.

Another thing that I’d like to talk about is the Working for Families aspect of this bill—for those who don’t know, an amazing initiative introduced by the Labour Government under Helen Clark. At the time it was introduced, for my own sister, this represented a really good opportunity for her, being the sole breadwinner and wanting to transition back to work. This meant that she could. As I said, many whānau throughout Ikaroa-Rāwhiti and throughout Aotearoa utilised this as a way to stay in work, get back into work, and advance their careers while still supporting their families. While we support the increase of the minimum payments you can earn outside your benefit, the reality is, if you’re looking at this bill and the overall impact it’s going to have on the quality of life of people throughout Aotearoa, they are still, with this increase of $3,000 a year, going to be struggling to afford the very basics.

We know of people around Aotearoa who actually enter into this scheme with the best intentions. They go in thinking they’re doing the right thing. Next minute, they find out they’ve been overpaid, and then they’ve got to repay a debt. One of the things we must make sure, when implementing these changes in any parts of our system that are designed to support families, is that whānau understand the process and are supported to navigate it so that they meet all the criteria and are not having to pay back money in the aftermath.

My closing remarks for this contribution to this bill are that, in a time when whānau are facing more cuts, more pain, and more costs, this Government is prioritising this hodgepodge bill that is going to have very little relevance to everyday Aotearoa. Tēnā koe e te Māngai.

Members, the time has come for me to leave the Chair for the dinner break. The House will resume at 7.30 p.m.

Good evening, members. I hope you all dined well. We are now on the Taxation (Budget Measures) Bill (No 3). We have a split call of five minutes—Nancy Lu.

19:30

I cannot wait until we get to the committee stage so we can debate this bill. I commend the bill to the House.

Thank you. I have the community and voluntary portfolio, so I’m going to devote my speech to that particular section of this bill. I want to remind the House that last year, Nicola Willis talked about changing the charity sector in a way that was quite concerning to that sector. It involved taxing the entities that supported those charities—the commercial entities attached—and that all that money went back into our charitable sector. It was our op shops, and it was the kinds of things that support that sector to do the amazing work they do when, often, the Government’s fallen down on doing it.

Now, that went through a process of great alarm in the sector, and I met with a lot of the sector at that time. We were very pleased to see the Government back away from doing that, at that time, but it meant that I met with some incredible people working in that sector who really did understand it and were brave about it, and advocated. For their troubles, tonight they get changes to their sector with no consultation whatsoever, and I have received feedback. Now, the reality is that because we are in urgency after the debate, we are avoiding most of the information that I need to do my job to look after that sector which is so important—to go and talk to the people who know this area like the back of their hands, who know what will work and what won’t.

A week ago, maybe two weeks ago, I was on a political panel in this area. Everyone stood up at that panel—ACT, National, and New Zealand First—and stood there and told us that they believed in this sector, that they were there for them, and they did not mention any such changes in the rules for that sector. Now, because I have not had a chance to ask for the comments of the people who have sent me emails, I am not going to say which groups have come to me with their comments. But I can read you the headline from the email I received this evening, and it was from an incredibly reputable charitable sector source. It reads, “This is incredibly disappointing.” That’s what they think about the changes tonight.

There is a group of comments from various people—they are all people who I know and who do fantastic things for New Zealanders. They all talk about the lack of consultation on this issue, and they talk about particularly the issue over capping the amount, but they’re talking about it as doing some real damage. They’re concerned about it backfiring because there will not be the gifting that there should be in the situation. That is something I’d like to explore.

It may be that, in fact, it’s a robust discussion and we end up in a different place, but we’re not having that discussion tonight. We know Nicola Willis last year proposed changes to the sector that turned out to be against any kind of logic and good reason. And what has she learnt from it? Rush them through as fast as you can. Don’t talk to the people that really matter. Don’t talk to those people about what the actual effect will be.

Now, when I was at the political panel a few weeks ago, it was really evident that the difference between my position and that of some of my colleagues on the other side of the House, those in Government, was that I was putting up a proposal for a philanthropy strategy. We have a situation right now where we have a whole lot of people reaching the age where, in their wills, we need to make sure that they leave money to philanthropy, but we also need an ecosystem for philanthropy. It’s going to be incredibly important. It always has been, but it’s a particularly important time, and it’s really important we have a strategy, but we don’t have one. Nothing’s been announced in this Budget that’s a strategy. What we have are a couple of piecemeal takebacks in this particular piece of legislation. And what concerns me is this is absolutely, literally looking the gift horse in the mouth—these are the people who gift to our causes. These are the things that glue New Zealand together, and we’re ignoring it? We’re not having a philanthropy strategy? That just seems crazy to me.

Now, I want to just talk about the regulatory impact statement (RIS) on this, which concerns me. The regulatory impact statement makes the same sort of point. It’s not just the people at the end of my email who are making these comments. They are very clear in this RIS that one of the problems with it is that, owing to Budget conventions, public consultation on this proposal has not been undertaken. And then they talk in the RIS about the possible limitations on their judgment. This is of real concern to me because they say that some of the effects and impacts described may have been understated or overstated. For example, “we have limited information to access whether a reduction in taxpayer entitlements would produce a behaviour response in the following areas”—and then they actually list four areas, and the last one of them is, “The extent to which the donation tax credit supports giving behaviours by households,” and they say that it’s suggested it won’t necessarily get passed on. It also says that “Whether households withdraw or refrain from contributing financial resources to the community and voluntary sector.” is something that they’re concerned about.

I wonder: why are we here, in urgency, on a bill of this kind, rushing through a change when we don’t know what impact it’s going to have on our sector, which is so critical in New Zealand? I can’t for the life of me think that it is important to do this tonight unless there is some nefarious reason that we don’t want to hear the sector on this, because that’s how we make good law in this country, and we should be proud of it.

I expect urgent legislation on Budget day, but I don’t expect it to be misused to bring about change that is half-baked, that has not been thought through. Why would we do that to a sector that we rely on and that produces so much good for this country and has so much potential in it? Why would we do it, other than to hide from the reality that we don’t have any supportive relationship with that sector, that we’re not really willing to talk about how much that sector produces, and to build a plan with them that works better?

I see this as a very concerning part of this particular bill. I am extremely concerned when that is the first response I get from the sector to the bill. These are good people. They know what they’re doing. Why wouldn’t we, at the first thing, be talking to them?

Now, in a few minutes, we will go through this piece of legislation, and we will end up, in this short evening, in committee stage. I’d also like to know why it is that the Government thinks that I can do my job properly in this kind of framework, on something as important as this. Why wouldn’t we put this into a process where we hear from these people? I just don’t get it, and I will be asking the Minister—but I bet I don’t get a good answer—why wouldn’t we want to build a situation of trust with this sector? Why wouldn’t we want to know if we were getting it horribly wrong?

Why wouldn’t we want to know if we were getting it horribly wrong? So I want to just return to this RIS one more time and talk about the issue about the wider concern about the plan. One of the things that the RIS talks about is that there are other options. There are other options, it says, “including multiple rates, removing certain charitable purposes, or introducing a United Kingdom - style gift aid scheme … [These] were considered but not progressed due to complexity or fiscal timing constraints.” Fiscal timing constraints? We’re not looking at our system as a whole, looking at the UK gifting system, deciding these things? I’m not saying we need to land there. I’m not saying the Government needs to land there, but that’s its job. It’s negligent not to look at those things before it makes these decisions because those plans—I’ve been to the UK. I’ve seen that work. It needs a decent plan, this area. Thank you.

19:40

Thank you very much, Mr Speaker. This is a great piece of legislation. I commend it to the House.

I call Rachel Brooking. This is a Te Pāti Māori call—five minutes.

Thank you, Mr Speaker.

Let no call go to waste.

That’s right. We were on our feet there to talk about what my colleague the Hon Dr Megan Woods has called the hodgepodge omnibus—I nearly said ominous. Is it ominous? I don’t know; the Budget certainly is. I’m not sure about this.

It is interesting that, as Megan Woods said in her second reading speech, this is the centrepiece legislation for this Government’s Budget, and it does not seem to cover that many things.

Has it got the environment in there?

Oh, has it got the environment in it? No hint of the environment in it, Steve Abel. In fact, we’re not sure why any of it is urgent.

We’ve heard a couple of things already. We know that there’s this $100,000 maximum donation that you can give to get the tax benefit back, and that’s 33 percent, so $33,000. We’re not sure exactly why this is in here, and I’m sure we’ll have lots of questions to the Minister of Revenue about this, and what thought has gone into—well, what if to get around this, you are a husband and a wife, or a wife and a wife, or whatever arrangements you have, and you both then give $100,000? We’ve also, of course, heard the question, “Is this going to act as a disincentive for people to donate to charities?”, when we know that charities are crying out for donations. Because what happens in this Budget and the last Budget is that services are getting cut—cut, cut, cut.

We know and we keep hearing about the very real need for things like food banks and that they are becoming much more integral parts of our society, and that you have working people using those food banks. That is one line of questioning that, obviously, previous speakers have mentioned and that we will progress.

Another much talked about thing, even in some very tiny, short speeches from the Government side, is this dry lease for the leasing for aeroplanes. This is an interesting thing that maybe not all of us have spent a great deal of time thinking about—dry leases for aeroplanes and parts of aeroplanes, and this is when they are owned by someone who’s offshore. I imagine a company that owns aeroplanes is going to be quite a big company, and then New Zealand companies want to loan bits of those aeroplanes or entire aeroplanes, and so there’s a tax exemption for those foreign owners of the aeroplanes—is my understanding. But, of course, the Minister will tell us much more in the next stage of this bill. I am sure about that.

Interestingly, this is retrospective. If you look at clause 2(2)(b), it relates to the aircraft. So that comes into force on 1 April 2026. For those of you who have not observed, we are in May 2026. We’re almost in June, in fact, of 2026. So it would be interesting to know why that needs to be retrospective. Then we go on and we see that there are changes for a shareholder on an outstanding loan with a company six months after the company is removed from the Companies Register. I have some questions there. Is that just a simple tidy-up? What’s going on with this? And then there are simplifications and changes to Working for Families.

Again, if you look at the bill, at all these bits, they refer to lots of other pieces of legislation, so it’s hard to read on the face of it. So, of course, we’ll have questions to the Minister about that. Are they just really simple tidy-ups or are they something more substantive?

But my question is: why are we here in urgency for things that clearly are not urgent? If this is all about this Government’s final Budget, I want to ask them: how does this bill make life better for the people of New Zealand? How does this bill improve the productivity of New Zealand? I don’t think it does at all, and there is no reason for us to be here in urgency tonight.

This bill is set down for committee stage immediately. I declare the House in committee for consideration of the Taxation (Budget Measures) Bill No 3.

19:47

Thank you, Madam Chair. I know that both myself and the Hon Dr Deborah Russell have a number of questions on this bill, and I’m just signalling to you, Madam Chair, that we do intend to take this bill clause by clause, even though there are some broader themes around this bill.

I want to start with clause 4, because clause 4 is a specific one around non-residents providing the use of aircraft in New Zealand. Now, I want to check with the Minister of Revenue: my understanding is that one of the incentives when it comes to this particular clause is around the fact that there’s a concern around the lessor of aircrafts or parts of the aircraft passing some of the taxation cost on to New Zealand businesses as lessees of this. This is particularly in light of some of the changes regarding the fact that in the airline industry, operating leases are becoming more common. But I want to check that. Not including this particular section, my first question to the Minister is: has the Minister actually considered any other alternatives around this particular part, rather than providing an exempt income for the lessor? Surely there will be other ways to achieve the same outcome without giving a tax exemption because of the fact that they are passing a cost on to New Zealand businesses. I think I’ll start with that question. I know that the Hon Dr Deborah Russell actually has other ones.

Just to mention, furthermore, I do have an amendment on this particular clause. It will be a shock to the committee to know that I have an amendment. I would be interested in engaging with the Minister on my amendment, but I think that as a starting point I would ask the Minister if any other consideration has been taken when it comes to that non-resident contractors’ tax in relation to this particular clause.

19:49

I too am interested in clause 4, and, as I’m sure the Minister of Revenue has become used to, we do want to go clause by clause through this bill, especially given that it’s our only opportunity to discuss some of the measures in it.

Clause 4 modifies section CW 56B so that it says, “An amount of income derived by a non-resident from providing the use of, or right to use, in New Zealand, an aircraft or parts of an aircraft under a dry lease is exempt income.” That term “dry lease” is now, I think, a new definition that’s been added somewhere in the bill. Let me just check. Yes, it’s certainly in clause 22, which has the section Y definitions. It just sort of begs the question: why is this income being made exempt altogether?

We have an overseas entity that is deriving income from New Zealand. Ordinarily, in the tax law, income that is earned by a tax resident of New Zealand is subject to taxation, and income that is earned from New Zealand, by assets or investments or whatever that are in New Zealand—even if it’s earned by someone who lives overseas—that is subject to taxation as well. That’s the ordinary way the tax law works, and giving some type of entity an exemption from that tax is actually quite a significant tax concession. They’re saying that there’s something so important about this type of activity that it should be exempt from income tax in New Zealand altogether. We’ve got to remember that there is money going out of New Zealand—people in New Zealand hiring these aircraft, sending the money, the revenue, out of New Zealand—and the New Zealand Government, the tax take, doesn’t get any part of that whatsoever.

That would be my question for the Minister. Why make this income totally tax exempt? It is a very significant concession, and there needs to be a very good policy justification for it.

19:51

Thank you very much, Mr Chair. This is actually a very short bill, 13 pages—most tax bills are quite long—so we’ll cover them off. Clause 4—a question raised by two members. A range of options were considered. The Inland Revenue Department recommended an exemption over other options because it was simpler and quicker, and on that basis that’s why we’ve landed on that option.

19:52

Mr Chair, thank you. With respect, Minister Watts, that’s kind of not an answer. It says that the Inland Revenue Department said this would be simple and quick. Well, I agree it is going to be simple and quick to put an exemption in place, but there are lots of things that can be simple and quick. That still doesn’t give me the policy justification for why this type of income should be exempt from tax. I really want to focus in on that: why this type of income? Sure, it’s quick and short and easy, but why is this income being exempt from tax?

Thank you, Mr Chair. While the Minister of Revenue gets advice on that, I do have some further questions around clause 4. I think this is probably something that, by taking a substantial call, the Minister can clear up the questions in relation to clause 4.

Now, in the very good bill commentary that Inland Revenue has put together around this, it makes the case really clear: the amendments are intended to reduce the costs of accessing aircraft and parts in New Zealand. It talks about how the non-resident contractors’ tax (NRCT) does not function as intended in relation to aircraft leases, and we’ve heard a lot about that in this House, but one of the things I’m interested in, in terms of the problem definition, and in terms of forming this policy, is how this came about. Was it from a broader look at the operation of NRCT in New Zealand and it came up that aircraft were a particular subcategory of that?

My reason for asking that is, really, to understand whether there are any other categories of assets that have been brought to the Minister’s attention, when they’ve been doing the policy work to bring this amendment, that potentially could qualify using similar arguments. We know this is very much around the dry leases, so it’s not covering the fuel. It’s the operations, and there are questions still on the table—and, I think, very important questions—about any tax. But, really, is this something that has the potential to have creep into other asset areas, so that we can understand what that might look like? Understanding the policy process that the Minister followed would be useful for the committee.

19:54

In regards to clause 4, it would be fair to say that, in regards to the policy problem, there is a range of compliance costs and complexities that come with the broader non-resident contractors’ tax scheme. In particular, for this item that has been put in this legislation, we did consider a number of options, including not making the income fully exempt. However, as I have noted, because of the compliance costs and the ability to fully remove those, that’s why we decided that the exemption was the most appropriate aspect. We also took into consideration different treatments that result from the application of double-tax agreements.

19:55

Thank you, Mr Chair. I do appreciate the Minister of Revenue’s response, because I think, like the previous speaker, the Hon Dr Megan Woods, said, while the commentary for this is helpful, unlike some of the other parts of this bill, there isn’t actually a regulatory impact statement, which means that the responses in terms of the options that the Inland Revenue Department has considered is really, really important in order for us to get a clear understanding of how this came about. Again, it seems a little bit odd for this particular part to be included as part of a Budget bill and as part of Budget urgency.

I want to pick up on something that the Minister has said, just right at the end, in terms of some of the considerations when it comes to double-tax agreements. One of the things we do see, when we are looking at the airline industry, is that operating leases are becoming more common, but lessors of aircraft are often resident in countries ineligible for relief from non-resident contractors’ tax (NRCT) under a double-tax agreement. My understanding with this particular clause is that the exempted income is for everyone, as opposed to limiting it to those countries where the lessor is unable to get relief from NRCT under double-tax agreement. What about ones from countries that are able to get relief from NRCT under a double-tax agreement? Are they not exempted from tax, or does everyone get a blanket tax exemption; in which case, what would it mean, then, for the lessors of countries who are eligible to get relief from NRCT under a double-tax agreement?

19:57

I note my colleague Dr Lawrence Xu-Nan’s questions on clause 4. I only have one related question remaining on clause 4, and then I am going to move on to the next clause that I am concerned about. That is, was the Minister of Revenue lobbied by any airlines for this change, and were there hard copies of any of the documents that have been handed over by policy advisers to the Minister—

Or any other Minister.

To his or any other Minister’s office? That’s a question we’d be quite interested in in this House this week.

Good question.

I think it’s an excellent question, Dr Lawrence Xu-Nan.

I want to move on to clause 5. This is actually one of the more interesting sets of concerns in this, as the Minister notes, small tax bill, but there are some big issues in it. This is clause 5 and a very, very small part of clause 22, which is the definitions section, I’m not too concerned about—clause 22? Yep, that amends section Y, which is the definitions section of the Income Tax Act.

Clause 5 is going to take a wee bit of working through. What this clause does is deal with what is a known problem in New Zealand, and that is the problem of small companies, in particular, making loans to directors, shareholders, and associated persons of directors and shareholders, and those loans never being collected. Sometimes, when the company is wound up, they are absolutely never collected, so it becomes a way of initially deferring tax and then, ultimately, forgoing tax. I’m not sure what the opposite of “forgoing” is, but forgoing tax altogether. I don’t want to use nasty words in this case, but it’s a pretty cunning use of the tax system.

Ordinarily, what that represents is that the loan is a transfer of value from the company to the shareholder, the director, or the associate of those people. Ordinarily, that kind of transfer of value would be treated as a dividend, particularly if you’re shareholders, and subject to taxation in the hands of shareholders.

If we’re going to try to crack down on this practice—I agree it is something that needs to be cracked down on—we do need to find some way of making those loans subject to taxation, because, effectively, they are income or a transfer of value going from the company to the shareholder, director, or whatever. In principle, we are good with this measure. We think it needs to be taken.

I’ve gone through, at a broad level, the mischief that this clause is solving, but what I want to understand from the Minister is just the level, the amount, of money that is involved in this and the amount of revenue, of tax, the Government expects to collect by correcting this problem. That’s a very straightforward question to start off with as we examine this clause: just how much revenue does the Government expect that it will get in because of this measure?

20:00

Thank you, Mr Chair. Just in terms of waiting for a response from the Minister of Revenue with my previous question around clause 4, I have one final question on clause 4 and I’ll move on to clause 5 as well. I think the final part is that I mentioned to the Minister previously whether he would consider my amendment, which, essentially, says that any amount of income that is payable derived from a non-resident from providing the use of or right to use a New Zealand aircraft or parts of an aircraft under a dry lease must not pass any tax on to businesses in New Zealand, which I think would address the main policy issue over here.

The concern I have with this particular clause is that rather than addressing the policy issue of overseas airlines, etc., passing costs on to New Zealand businesses, we then simply pander to overseas airlines by saying, “Well, why don’t we just avoid you passing the costs on to New Zealand by just making you exempt from tax?”. It’s, I think, a similar argument that sometimes we see when it comes to GST, etc., where there’s always a way, for example, for the lessor—particularly when you’re looking at a market-driven industry, at this stage—to increase the cost and pass that cost on to New Zealand businesses regardless. I just don’t know if making the dry lease an exempted income will actually ensure that either the price is reduced or that it’s not going to be increased. Again, it comes down to being market-driven, as what it says in the commentary.

Now, moving on to clause 5, the first question I have—I know that the Hon Dr Deborah Russell has a lot of questions around corporate tax, and I always learn a lot through her in a lot of these tax debates as a result, as well as the Minister, who, really, in the past has been incredibly helpful and informative in terms of our questions. I want to just focus on some of the details later, but one of the first questions is on clause 5(3), which “applies in relation to a company removed from the register of companies on or after 4 December 2025.” Again, this is one part of the clause, unlike some other parts of the bill, that doesn’t have a regulatory impact statement, but the commentary doesn’t seem to address, as far as I can see, why that particular date is selected, so if the Minister wouldn’t mind enlightening the committee on why 4 December 2025.

20:03

In regards to the question on clause 4 on double tax agreements, in effect, what we’re doing here is fixing an inconsistency between countries that have a double tax agreement with New Zealand and those countries that do not. As a result of this change, there will be no inconsistency between those two situations. There is a significant degree of compliance cost that results as a result of these types of transactions, and by exempting the income, it removes the compliance costs and the process. As you can imagine, an offshore lessee from any other part of the world having to engage and deal with the New Zealand tax system—in which they’re actually going to get that credit back in some way—the process and the compliance cost just outweighs the benefit in that regard.

The question from Dr Deborah Russell on clause 5 in regards to the money involved—$146 million over the forecast period. Those are the two questions.

20:04

Thank you. Covering both that answer to clause 4 and a brief question about clause 5—the Minister of Revenue has just said there in his response that the reason to not require these foreign companies that own aeroplanes to pay tax is because already some of those countries don’t pay the tax. He’s shaking his head. If he could explain what the difference is between the countries that he just referred to and if there’s been any analysis of how much tax will be lost because of this change—I know he keeps talking about the complexities of it, but we just want to know what is at stake here, which I think is a reasonable question.

Reminding him, of course, that Deborah Russell also asked who has asked for this change, and has it been proposed by those foreign companies or has it been requested by domestic users of aeroplanes in New Zealand? Those are my questions on clause 4.

On clause 5, I just have a very simple, high-level question, and it is: is the policy intent here simply to have a date, a trigger date, and that is all that’s happening to make this issue cleaner? If so, noting my Green colleague’s question about that date, 4 December 2025, I note that that’s when some discussion document was proposed. Has there been any analysis about how many people responded to that discussion document, if they expected the date to be 4 December 2025 because of that discussion document, and whether that timing makes any particular difference if it was retrospective to 2025 or if it was, say, April 2027, like most of the rest of the bill?

20:07

I’m happy to answer that, and Lawrence Xu-Nan asked a similar question. The 4 December 2025 application date is the date on which the consultation paper was released, and, therefore, in effect, by applying that date, it mitigates any structuring opportunities or people looking to make changes to take advantage of the fact that as of that date, it was made public. That’s why that date has been selected.

Thank you, Mr Chair. Thank you, Minister Watts. That’s very sensible. I think that’s a really sensible reason for a date, then. I know that my colleagues have a lot of questions on this clause as well. I just want to focus on one other question at this stage, and this is to do with clause 5(1). This is the new subsection (9B). I want to just focus on the six-month period. Again, in some ways, what is the rationale for having six months there? Were there any other periods? Although it mentions six months in the commentary on page 11—“The period of six months allows for reinstatement of a company that is inadvertently removed from the register.”—what it doesn’t tell us is: is that a common period of time that’s already in existence? Is that standard practice for IRD, to wait six months just in case something was removed inadvertently?

Then, furthermore, from that, if the company was restored during that period, does that mean that this clause doesn’t apply anymore? Then what happens if a company is reinstated or—if the company is registered to have continued after that six-month period, is there a calculation where that whole year is then considered to be de-registered, or is it only going to be the period from the six-month cut-off date to when the company is reinstated? Those two questions, if the Minister of Revenue wouldn’t mind explaining.

20:09

Thank you, Mr Chair. My question to the Minister of Revenue is also on clause 5. I think that we signalled in our first and second reading questions that we can see that this is something that we have to make sure that we have robust law around. We had $29 billion worth of loans to 119,000 companies for the income year ended the 31 March 2024. So we are talking about a very substantial figure here, so making sure that this is a robust regime is critically important.

My questions, going through the regulatory impact statement, are around the options that were considered. A number of options were considered—six, in fact—and they were measured against the criteria of efficiency, equity, minimising complexity and compliance costs, and integrity, as well as the overall assessment. As with any of these matrices that are put together in terms of measuring against various criteria, we can see that different options have different strengths. The option that the Government has decided to proceed with in this legislation is option five, which is, “Tax shareholders on outstanding loans six months after the company is removed from the Companies Register.” We can see that it did not score well for minimising complexity or compliance costs; in fact, it scored as being worse than the status quo in terms of that criteria.

There were other options that scored better on that score. So there was the status quo, but then there was also option six, which was to improve record-keeping, which was one option that was put through, and which also scored well on equity, scored well on integrity, and scored well in terms of the overall assessment. I’d like to hear from the Minister, given we don’t have a chance to really get into this at a select committee, some of the thought processes that he and his officials went through on landing on that option out of six, and what it was that made that option the one that they went with.

The other thing that I’m really interested in—and this would be something, again, that we would have asked through a select committee process—is whether or not this change brings the loan under financial arrangement rules, and whether that is the case. Does that then mean that loans under $200,000—which is the threshold financial arrangement—are not going to be affected? I genuinely can’t tell from the documentation that we’ve been given whether that is either the intent or the impact of the changes we’re seeing here in terms of bringing them under those broader tax definitions. Thank you, Mr Chair.

20:12

A couple of questions following up on a couple of things that both Dr Lawrence Xu-Nan, I think, has said and—I’m not quite sure who said it, actually. We were just discussing the discussion document that went out, and the Minister of Revenue explained that that 4 December start date 2025 was related to the fact that once the discussion document is out there, the possibility of tax structuring is out there. That’s a polite way, isn’t it? Tax structuring. I must remember that term.

But I just want to point to paragraph 20 in the regulatory impact statement. It says that “In September 2025, targeted consultation was undertaken with 10 private sector advisory firms.” Now, obviously I am not asking the Minister or his officials to disclose who those firms were. I have a pretty high regard for our tax community and the integrity with which they approach this sort of work and the consultation. Nevertheless, just as the possibility of tax structuring was opened up the moment that the discussion document went out, the possibility of tax structuring might also have been raised from that quite targeted consultation with private sector firms. Now, I know those people, the Inland Revenue Department does consult them in very strict confidence and that, ordinarily, we would expect that they would keep that confidence. Just some assurance from the Minister that they didn’t see any odd things going on between those dates.

20:14

Thanks, Mr Chair. Just going through a number of the questions. There was a question before in regards to clause 5 around the revenue at stake as a result of the change of the non-resident contractors’ tax change: $17.85 million over the forecast period. That was considered in the context of the cost versus the benefits to the broader economy and the compliance aspect and the importance of this on the broader airline sector. So that was in that component.

Within our tax and social policy work programme, which is publicly disclosed and announced, we have had on there the modernisation of this area. It’d be fair to say—and I’m sure the member will appreciate—that this area is an area that many within the broader tax community see as an area of high compliance and broader burden, taking into account the cost-benefit of that. As we work our way through that, this example that we’re legislating through this evening was one of the examples that we had sufficient information to be able to progress through legislation. At this point, that programme is ongoing. We’re continuing to assess and get feedback from the stakeholders involved, or all of those stakeholders that the member would expect—Chartered Accountants Australia and New Zealand, etc.—those types of respected and well-informed broader industry players.

In regards to Lawrence Xu-Nan’s question around the six-month time period, again, in regards to clause 5: is six months a common period? Yes, six months is a common period. It allows for reinstatement to register. Also, this period is used because, generally, we’ve had feedback from submitters that that’s appropriate. The question around what happens if the company is reinstated after the six months: the loan becomes taxable income.

20:16

I just want to follow up on something that my colleague the Hon Dr Megan Woods was talking about, and that’s the threshold around financial arrangements. You’ll appreciate we only got this bill in our hands just a few hours ago, and I have spent my time reading it and thinking it through, but there’s stuff I don’t always remember first up. I just want the Minister of Revenue to clarify this—just thinking back to the financial arrangement rules. I didn’t quite have time to go back to them.

My understanding is that a loan is a financial arrangement, and that the $200,000 threshold that my colleague Dr Woods referred to is to do with whether a financial arrangement is treated on a cash basis or treated on an accrual basis. So, no matter what, once the loan is a financial arrangement, it is brought in under the—I saw somewhere around the base price or something like that—base price adjustment. What that, in effect, does is that if the base price adjustment happens, the loan gets treated on a cash basis, and that, in effect, means it’s brought into the tax net. So that would capture all the loans below $200,000 quite easily, but what about the loans that are over $200,000? I’m sorry to go back to this. It’s just taken me a while to remember this and to puzzle it through. As I’ve said to various rooms of tax people recently, I do know a fair amount about tax, but I don’t remember everything because it’s actually quite a long time since I dealt with it every day. I wonder if the Minister could just clarify that as to how that works around the threshold.

20:18

Yeah, so the member is correct that loans under $200,000 are not affected by this new rule. Sorry, loans under $200,000 are—my apologies—affected by the new rule.

In regards to Dr Megan Woods’ question around why the shareholder loans option was chosen, the options that were assessed are not mutually exclusive. The option that we are progressing was supported broadly by the stakeholders that we engaged with, because, on the basis of fixing the gap, that’s in the current law.

In regards to the broader question around why this is under the financial arrangement rules—again, going to the member’s question—it’s simpler than dividend rules. Again, preferred by stakeholders and, from a broader tax point of view, you’re going to get the same amount either way.

Thank you. I just want to clarify, Minister Watts, because I think you stumbled over your words slightly. Loans under $200,000 are captured?

Are captured.

Yeah, good. Ha, ha! Pretty happy with that. Thank you, Minister, for clarifying that.

20:19

Thank you, Mr Chair. Apologies. Apparently, I picked up three of the regulatory impact statements pertaining to this bill, and I missed the fourth one, which is on this particular part. It was very helpful, I think, getting a signal from the Hon Dr Deborah Russell when she was referring to the regulatory impact statement, so I can quickly grab a copy.

I want to check, in terms of the regulatory impact statement, one of the things I was interested in—and please, Minister Watts, correct me if I’m wrong, because, again, we’re kind of analysing this bill quite quickly—is in paragraph 66 of the regulatory impact statement. This is on page—doesn’t seem to have a page number. In paragraph 64 and then 66, it refers to the preferred option being a combination of option five and option six, but what I’m actually seeing here in terms of what’s in the bill is only option five.

Can I check with the Minister what happened to option six, which is improving record-keeping, which would help companies maintain the relevant information to support tax compliance with shareholder loans when the company ceases? How come option six wasn’t a part of this bill that I can see? If I got that wrong and option six is embedded somewhere in this bill, please let me know.

My second question is around what we see in the table just after paragraph 69. Part of that is to do with the regulated groups and their tax advisers and accounting software providers. It talks about the fact that Inland Revenue’s data indicates about 4,500 companies with outstanding shareholder loans are removed from the Companies Register each year.

Considering this significant number, I want to check how the Minister is planning on implementing this particular policy and being able to kind of get the message out there on what the new requirements are going to be, particularly when, I guess, some of the companies would have already been deregistered in the meantime. What is IRD’s general practice for getting in touch with the companies that are removed from the Companies Register as a part of this bill?

20:21

Just in regards to clauses 64 and 65 of the regulatory impact statement around shareholder loans, yeah, the member is right. The option that we went with was the option five around taxing the shareholder loans six months after the lending company is removed from the register. Option six was more record-keeping. Yes, it would help with better information that the IRD could consider for compliance, but to keep it really simple for low compliance, you just simply make it taxable after six months. That’s the option we went with.

20:22

Thank you, Mr Chair. Staying on clause 5 and this to-ing and fro-ing with the Minister of Revenue, can he go up a level, noting I’m not a tax lawyer, unlike some other people here—

I’m not a lawyer.

—or a tax accountant—accountant, sorry. I’m not an accountant—sorry. I’m a mere ex-lawyer.

Do you pay tax?

I do pay tax.

You have said that this clause, this mechanism, is to increase productivity, so what I’d like the Minister to explain is: am I right in summarising it as, for these loans that are under $200,000—only those ones—you have this by inserting a removal date, six months being a normal number in these tax laws, then what happens is that it falls away and you don’t have the burden of extra administration? Is that where the productivity is coming from or is it somewhere else? When he gives an answer—and I’ve got another question—if he can just go up a level in explanation about how this clause is productive, I think that would be helpful.

My second question goes back to clause 4. In his earlier answer, the Minister talked about different countries having different treatments, and so the question there is this: is he still expecting those owners of the aeroplanes to pay tax or is the expectation that they won’t, and, therefore, is it the justification that some of those owners of the aeroplanes from countries A, B, and C already don’t pay this tax, whereas the owners of the aeroplanes from countries X, Y, and Z do pay, and so we’re trying to treat them the same? If he could explain that, that would be useful too. Thank you.

20:24

I have one final question on clause 5, though I may need a follow-up, depending on how the Minister of Revenue replies, before I want to start moving on to clause 6. I just want a little bit of clarification around the nature of these loans. We’ve just been talking about the principal of the loan, but often these loans from companies to shareholders, directors, and associated parties are low- or no-interest loans, so I’m just trying to think through what happens in that circumstance.

I guess, if the shareholder gets a no-interest loan, that’s a considerable concession in itself, so how is that sort of interest discount treated? As the financial arrangement comes to an end, does the interest foregone by the company in the meantime get loaded on to the loan, which then gets taxed in the hands of the shareholder or something like that? I know that’s not particularly the focus of this particular clause, but if the Minister could just clarify the treatment of those loans just to be sure we’re actually capturing the right amount of income for tax purposes that has sort of been foregone to date because of the nature of the loan arrangement, that would be helpful to know. Then I do want to move on to clause 4 after that.

20:25

What the member’s referring to there is not subject to this legislation. But going back to the member Rachel Brooking’s question around sort of stepping back and linkage to productivity, the major problem here is that when companies are providing loans to their directors, then that, in effect, is income going from the company to the director. If that loan is never repaid, then that income and the tax on that income is never crystallised. As a result, that is a loss to the broader system. As the Hon Megan Woods noted from the information available, the numbers are really big. That is an integrity issue, and it is not fair, and therefore we’re dealing with it through this change.

Members, I’m aware that there hasn’t been a select committee and we’re getting some good, short, pointed questions, but we still do need to be progressing.

We are just about to, Mr Chair.

Well, I’m very pleased. The Hon Dr Deborah Russell.

20:27

I would like to move on to clause 6. That’s quite a new topic. It’s the change around tax credits for charitable or other public benefit gifts. It’s a really interesting change, because what this legislation does, and it’s a really short clause, but it’s actually possibly got the biggest impact here of any of the—well, maybe not the biggest impact, but certainly the most public interest that people might have around this particular change.

It’s changing the ceiling on donation tax credits. The way it does this is it amends section LD 1. Section LD 1 is part of getting a tax credit for charitable donations. At present, the limit on that for natural persons is the amount of their taxable income. You can’t give away more than you earn in the first place, so that makes sense. Now they’re going to insert “the lesser of $100,000 and” before “the amount of the person’s taxable income for that tax year.” Basically, we’re now capping the amount of charitable donations that may be made. Of course, $100,000 is quite a lot. Most people in this country don’t have that much taxable income. Plenty of people do, but a lot of people don’t, so it’s pretty interesting to do that.

The first question, I guess, is—well, there’s a whole set of policy-related questions. The tax law itself is not complicated, but the policy here is, so I guess let’s start right at the top-ish level. One of the things we might consider with this is just the extent to which charitable giving might be somewhat discouraged because there is now this cap of $100,000 around the tax credit. It’s not discouraged just because people can no longer get the tax credit, but there will be a lot of noise around this. It’s one of the more easily understood tax changes from this Budget. I’m concerned that ordinary people will now feel that their own donation of $20 or $30 or $40 or $50 or whatever it is may not be eligible for a donation tax credit, so there might be a bit of a flow-on impact. It’s not because people haven’t read the tax law; it’s just because they’ve read the discussion around it. Was that given any consideration as the policy for this was being pulled together? Just the dampening effect on charitable donations.

20:29

Thank you, Mr Chair. I, too, am moving through the bill and have questions to the Minister of Revenue on clause 6. As my colleague said, this is one where there is going to be a great deal of public interest. One of the things that the regulatory impact statement—which we’ve only had for a short period of time—does go and do is some quite careful analysis between the relationship between tax claim numbers and tax credit paid, and what the relationship of having this ability to make the claim is and what that will do to the number of donors and the amount of donations that will be there.

One of the things that I’m interested in discussing with the Minister, and hearing more about the advice that his officials gave him, is in para 46 on page 14 of the regulatory impact statement (RIS), and page 47. It says that the Department of Internal Affairs (DIA) and the Ministry for Culture and Heritage were informed of the options considered by this RIS: “From DIA’s perspective, reducing entitlements puts the delivery of goods and services by the community and voluntary sector particularly in regions that are vulnerable and are not well serviced by either the Government or under for-profit conditions at risk.”

This is very clear advice from the Department of Internal Affairs that they see there could be a putting at risk of the donations in the regions for some of the at-risk communities. Also, we had the Ministry for Culture and Heritage—and while the officials don’t seem to think that there’s going to be a large impact on either education donations or religious organisations receiving donations, there could well be in the arts. So I’d like to hear more around what the Ministry for Culture and Heritage—there’s only a very oblique reference to it in the RIS; I’d like to hear far more about what the impact on the arts is going to be, because “Both agencies [said] that the current policy setting for the donation tax credit is an important platform for the Government to further initiatives that promote philanthropy and deliver social and community outcomes and facilities.” Now, these are very serious questions for our communities.

It could well be that the changes being put through, particularly under this clause, are absolutely what we should be doing, but as Labour members signalled in their speeches in the first two readings of this bill, our decision whether or not we continue to support this bill hinges on answers we get around this clause about what it is going to do to donations. We are in a time when we have never needed our community and voluntary sector to be doing more heavy lifting than it is. Today, we saw that we have the highest level of homelessness in our history, and it is our community and voluntary sector that is doing the heavy lifting in the absence of the Government, who seems to have distanced itself and his taking a no, hands-off, it’s not our responsibility - type approach. We take this clause extremely seriously. The RIS has made some quite strong statements in there and we would like to have a good discussion about this, because, as I said, our ability to continue to support this bill hinges on our ability to ask questions on this clause.

20:33

Thank you very much to the members for the questions in regards to clause 6. The primary driver in regards to this does have implications in regards to tax integrity—I refer the members to the regulatory impact statement—but we have undertaken quite a comprehensive degree of analysis on this issue. Inland Revenue did a regulatory stewardship review in February 2025. We had an officials’ paper as well, on the not-for-profit sector, and then also a targeted consult on donor-controlled charities. We’ve done a lot of testing with the sector in regards to that.

It is our view that the integrity issues around misuse of the donation tax credit for aggressive tax planning is an area—and Inland Revenue has observed an increase in such behaviour, which is, in our view, facilitated by New Zealand’s comparative generous settings. This change will impact, we estimate, 350 donors in New Zealand. Virtually all individuals, with the exception of 350, will not be impacted by this. The cap of $100,000 of donations is, in all fairness, a significant number—or the maximum of your income, i.e., you earn $30,000 in a year and you donate $30,000. Realistically, again, this is highly unlikely for virtually most taxpayers. It doesn’t impact anyone giving $20 or $50 to whatever their favourite charity is—it has absolutely no impact; we’re talking at the other end of the scale.

In regards to whether this will impact overall donations coming into the charitable sector, we did spend considerable challenge and effort around this to get feedback. Inland Revenue and Treasury’s assessment is that there is no empirical evidence that indicates that the change that we’re doing is going to have any significant material impact in regards to the overarching way in which individuals donate. In fairness, those that have the means to donate that type of scale of money are not doing it in the context of simply always just a tax reason. The feedback is that many of those large-scale donations will continue to occur irrespective of what the tax is because those individuals are driven by another purpose.

20:36

Thank you, Mr Chair. Thank you for that explanation because it does clarify. I guess my first question is looking at the diagnosis of the policy problem. I’m looking at paragraph 4, which says that the donation tax credit has a fiscal cost. I wondered if, based on what the Minister of Revenue is saying, the idea is, by putting on that limit to the 350 donors who are going to be affected, that what we are seeing would be, I’m guessing, less tax credit being given, and therefore we’re generating more revenue. Is that part of the intention? [Minister nods] Cool. Thank you, Minister.

The second question I have here is—it’s also good to hear from the Minister that people are going to be donating regardless, and that the $100,000 threshold is not a consideration or a factor, but I want to check one of the things that we talked about in the previous section to do with clause 5. It’s around the commencement, or the fact that the “companies removed” applies if it’s 4 December because of the tax structuring or restructuring that could potentially happen. So, you put that date, whereas, for this particular part, it only applies from 1 April 2027 onwards, presumably to try to line up with the financial year. But what does it mean for people during this period, knowing that that is something that’s going to happen? Is there any consideration of, “Well, in that case, we then might just donate a lot more this year because then we can get more returns this year, and starting from next year, we’re going to start reducing it so that way we’re just meeting that $100,000 cap.”? Is that a consideration? Has that been something that has been considered as a part of this?

The other question I have is based on what we see just after paragraph 16 of the regulatory impact statement in terms of graph 1. This is graph 1 on page 9. We are seeing that the total number of individuals who are donating is kind of reducing, whereas the average tax credit per individual has increased over the last few years. I’m going to draw attention to what we see in paragraph 25 on page 11, where an Australian Productivity Commission study says that “household income is a much stronger predictor of how much a household gives” rather than tax benefits. I wondered if, as a part of this work the Minister’s doing in terms of the revenue generation for Inland Revenue but also potentially looking at a reduction of some of the tax credit, whether it has also been considered that, with households potentially doing it tougher, we are now going to be seeing an overall reduction in the amount of tax credit anyway because there are going to be fewer and fewer people who would be donating—if we are to go by what we’re seeing in paragraph 25 of this regulatory impact statement. So those are my two questions for the time being, but just signalling to you, Mr Chair, that we do have further questions on this particular part.

20:39

Just to finish off clause 6, the Government will spend approximately $19 million less per annum as a result of these changes. The 350 donors that I noted represent about 10 percent of donations submitted. For the main recipients—to the question before—about one-third of those donations are through to religious charities, and less than 5 percent go to schools.

20:40

Thank you. I hope that the Minister of Revenue is not correct that these would be the final statements on this clause, because this is an incredibly important clause. I have the portfolio for community and voluntary, and I have concerns already being raised in my emails about this particular clause. They are damning of the clause. I hope the Minister takes it seriously because I have a job to do, putting these questions, and I would like answers to them.

The first thing I want to ask is: when we look at the regulatory impact statement (RIS), there is talk under the heading “Tax integrity” about how the issue is “aggressive tax planning”. Now, I understand there may have been concerns about controlling entities etc.—those have been discussed—but this is not actually a clause that does this. This tax change applies to anyone who gifts $100,000. That people would give, to me, seems to be something that is in the interests of New Zealanders. If there are 350 of them gifting over that amount, that’s an important group to grow, so I’d like to know from the Minister why this was the chosen mechanism, because when I look below at “Fiscal sustainability”, it looks, here, like what the RIS is saying is that “The donation tax credit operates as an open-ended subsidy, limiting the Government’s ability to manage costs.” Is that really what’s going on? Is it that the Government doesn’t want to subsidise or to contribute that amount by this mechanism and that it wants to cap its liability for such donations? That, to me, seems a dangerous reasoning, given that we are getting so much benefit for that money, which is coming through our charities into our communities so much.

Then I’d like to look at part of the RIS that talks about the impact on this being lumpy. It says that some charities that use these big donations will be much worse off than others. Has the Minister done work in that area? Is it going to be lumpy? If so, can he give us more specifics about who is going to be affected—what charities? I appreciate that he said, “some religious charities”, but what charities are going to be impacted? What I’m getting on my email is widespread concern from philanthropists that they are going to be cut off at the knees by this clause and that they will not be able to donate in that way but, further, that the charities won’t be able to attract those big donations that they rely on and with which they do good work. It’s not just religions—in fact, it’s probably not any of the religions that do that.

The Minister raised the issue of doing testing in this area. Can he explain what that testing was? I am being told by my people—and I’ve got good relationships—that they knew nothing about this. What testing is he talking about? There doesn’t seem to have been any consultation with the sector itself.

Then I would like to know from the Minister—given the disastrous announcements last year and the fact that they really were misguided, which the Government conceded by withdrawing them—why this is coming to us in urgency, this particular clause, given that it seems like there’s plenty of opportunity to consult with the sector and get it right? Why are we seeing this in this form? It just doesn’t strike me as a very sensible thing to do, because the major concern I’m hearing is that this is going to have very backfiring consequences and we’re going to see donations dive. Now, I have also seen from the RIS that there is a dive in a graph on page 9. There is a complete dive in individual donations. It’s dramatic—it’s absolutely dramatic. Could the Minister explain that dive and why this is helpful, given we are having a dive in individual philanthropic donations, and why he thinks that is happening at the present time? Thank you.

20:45

Yeah, I’ll give you a simple answer for that. That’s when inflation goes really high and interest rates go really high under the last Government, and then, surprisingly, people don’t have any money to donate because they’re trying to keep themselves alive and pay for food and living costs. Take some accountability for your policies.

Anyway, going back to the other points of the question, again, if the member reads the regulatory impact statement, every question that she’s asked is included in there. It outlines clearly who was consulted as a result of that. I’ve already answered that in a prior question. It outlines the issues around tax integrity, and nothing that is being announced today is going impact those people that the member’s getting emails from, because they can donate whatever they like to charities. It’s just that the Government isn’t going to have an open cheque book and give them a subsidy over $100K. I’m sorry, but that is not unreasonable.

Thank you, Mr Chair. Look, I just want to take the Minister of Revenue up on that last statement. The Minister has opened something up there by saying that, in fact, the reason that the number of charitable donations has dropped is due to inflation, but if the Minister cares to read the chart—cares to read the chart—in actual fact, the biggest dive is under his Government. I think the Minister’s going to need to find a better explanation than that. I know it was enjoyable getting that political jab out there, Minister, but I think that the explanation simply does not stack up, not when one actually reads the graph properly.

Just moving on from that, I do want to come back to a couple of issues here. This one has been canvassed slightly. The Minister has said that the reason for putting this part of this tax credit in place was, “Well, first of all, we shouldn’t have Government subsidising charities to the extent of over $100,000.” Those were, effectively, his words. Then he said, “The impact was only $19 million a year.” Now, $19 million—you can do some stuff with that, but in the context of the Government’s accounts, that’s a fairly small amount. In actual fact, I don’t think the motivation can have been just that the Government revenue has been affected. Now, that leaves, then, tax integrity reasons as to why we might change around this particular tax credit, but that simply begs the question: why, then, were we not doing more work around the charities that are donor-controlled charities?

That’s where the tax integrity problems are. It’s not with genuine philanthropists giving money; it’s around the donor-controlled charities. Now, I note that there’s a bit of a throw-away line in the regulatory impact statement, I think, or somewhere in one of the documents I read, that, perhaps, that was better controlled through the charities register and looking at whether something was a genuine charity or not. But in actual fact, the real mischief we know has been done through donor-controlled charities. That is exactly what happened with stuff that’s been particularly well canvassed in some really fantastic investigatory work by Matt Nippert around the Wright Family Foundation and so on. That was a donor-controlled charity and a complete rort, and eventually the tax law caught up with them. That was exactly what was going on, but it was the donor-controlled charity that was the problem, so why not address that problem instead of sticking a cap in there at $100,000? There are those particular issues I would like the Minister to address.

I’m a politician. I enjoyed the Minister’s political gibe, but it didn’t actually answer the question. I finally want to carry on with this. [Interruption]

Please don’t shout across the Chamber while a member is speaking.

I’m happy to be quiet while they do it, if you like.

Well, they can get up and take a call.

Yeah, take a call. I was going to raise that one around the donor-controlled charities—oh, the second issue I’ll raise here. Look, this deals with individual donors with natural person donors. That’s who the particular tax credit is oriented to. But natural persons—you, me, other people—can get this tax credit. To be honest, I’m one of those New Zealanders who doesn’t bother claiming it. If I’m giving to charity, I’m giving to charity—that’s that. But there’s another set of entities who can, in effect, get a Government subsidy for making charitable donations, and that is companies. Companies get a tax donation for making charitable donations.

I am sure that if we’re going to start controlling the amount that individuals can give as charitable donations, is there work being done around companies giving charitable donations as well? Now, in some ways I would hope not because I don’t want our charitable sector to be scrambling for funds—I think they value those funds that they receive from companies as they value the funds from philanthropists. But if the Minister could let me know: is there any work being done around the amount of donations that companies make for which they get a tax subsidy?

The Hon Rachel Brooking, and I just want to remind the committee that this is a committee stage and so it’s a question-and-answer session. Please actually make sure the answers are coming through and not speeches.

20:50

Thank you, thank you. Mine is a clarification question for the Minister of Revenue and then a new question. We’ve had, with the back and forth—we understand that the policy problem is that it’s a revenue issue for the Government and the $100,000 has been set and it’s explained why in the regulatory impact statement (RIS). The issue at paragraph 90 of the RIS goes through—and I think the Minister referred to this before, saying that the donations of that $100,000 nature go to religious charities at 27 percent, other charities at 68 percent, and schools at 5 percent. That compares with all donations—that they are all totalled, so not just the $100,000 donations but all of them—as having a much higher proportion of religious charity. That’s 63 percent, and other charities is 29 percent and schools is 8 percent, so not too much difference there.

But the point is that these $100,000 big donations seem to be more likely to go to other charities. The question is if he’s done analysis or wants to comment on what the impact will be on those other charities that are not religious and they’re not schools; and if he agrees with my reading of the RIS there.

Of course, then my separate question—not clarification question—is: we turn the page and it talks about Inland Revenue to monitor substitution behaviour. I raised in my second reading speech if this is the issue where Inland Revenue will be looking at families of donors to see if—like a husband and a wife, if they both donate $100,000, what happens there? Is that something that Inland Revenue is going to be looking at?

Then my third and last question on this is: this proposed change is for 1 April 2027, so it’s not retrospective—that’s what it says in the RIS; I think it’s the same in the bill. But if the Minister could confirm that, and then if there’s been any analysis about the expectation talked about in the RIS at paragraph 91, that some very high-value donations might be brought forward, and if that’s something that’s of concern or if it’s just something that has to happen.

20:53

Yeah, I thank the member for the question. The question around why aren’t we—just looking at clause 6—changing the donor-controlled charities rules? The short answer is that this would be too complex, and the reason why: when we look at that 350 donors and the proportionality in that, one of the areas that we are, and IRD is, very concerned about is that there is a growing area within that area of grouping around, in effect, donations going through to donor-controlled charities, and then those loans are coming back from those charities to these individuals. I’m not saying those are the individuals that are emailing members here, but that’s what some people are doing around tax integrity. Obviously, we don’t and can’t have that, and that’s why we’re tightening up.

What we said is, “What’s a simple and practical way to deal with this entirely?” Simply, the cap of the $100,000 or total income means it’s just across the board. We don’t have to go straight into a donor control; we can cover the whole lot.

The primary purpose is not one around revenue. There is a revenue benefit to the Government as a result of this change, yes, but as the regulatory impact statement (RIS) outlines clearly, the tax integrity matter, balanced off with the fact that we don’t have evidence that indicates that this is going to have a reduction in the overall donor responsiveness to making large donations—on that basis, we believe that we’ve got the balance right.

The question around: what about companies? In effect, across the whole board, about 90 percent of the donations are coming from individuals, 10 percent from companies. IRD’s monitoring of that area—and they do monitor it—is not signalling any material concerns, but the IRD will monitor that area. If they do have greater concerns, then that’s something that we may look at in the future, but right now we’re not.

20:55

Thank you, Madam Chair; and thank you to the Minister of Revenue for those answers. I have some questions that are related but go into paragraph 17 of the regulatory impact statement (RIS). I think one of the things this RIS gives us is a fascinating insight into the kind of broad category of donations of philanthropy in New Zealand. I think one of the interesting things it says for the last decade—and my colleague mentioned some of these categories—the proportionate value, not volume; gifted to schools, and that was entities registered under the Education and Training Act, religious entities, and then, of course, there were the other categories there. There is some really good analysis that sits behind this RIS, and I wondered if the Minister had received any information or advice when coming to this around in which of these categories the most mischief in terms of the misuse of charitable status in our tax law was lying.

Because I think one of the things that we are concerned about is that “other” category, which involves medical research, animal welfare, international aid, donations to the arts—that’s the 29 percent that make up the other entities that are identified in the RIS. We do have concerns about a decreasing level of support for these entities and whether we can see whether or not there was a predominance—we have 8 percent of it going to schools and 63 percent going to religious and 29 percent going to other—where the mischief most fell within those three categories.

20:57

Thank you, Madam Chair. I too wanted to just follow up with the Hon Dr Megan Woods’ question and just ask one more layer from that. I think the distribution question based on what we see in paragraph 17 is important. But I also want to check on whether there’s been any analysis on the $19 million that the Minister of Revenue has mentioned and what would be the impact to—for example, if it’s majority from schools, then will there be an impact on children, or either schools or religious or other, and if there’s any particular understanding around what the impact is to certain Māori organisations as well?

I only have one other short question for this clause, Madam Chair, before I’m going to move on to clause 8, but others may have questions for clause 7. My final question around this is around—oh, I don’t know where my final question went. I will move on to clause 8 and maybe I will remember what it is on this particular part. Just moving on to clause 8—I know that I’m moving on to the next major topic, which is around the calculation of family scheme income—

I just want to double check if there’s a question on clause 6, and I’ll give you another call if there is.

OK, that would be great. Thank you.

OK. The Hon Dr Deborah Russell. I thought you had another question on that—

20:58

Yeah, thank you. I did have one final on clause 6, which I wanted to—

Yeah. OK.

Yeah. Thank you, Dr Xu-Nan, and thank you, Madam Chair. A remark first of all and then the question. The Minister of Revenue said that the reason we didn’t go down the donor-controlled charities route was because it’s complex. Complexity in the tax law has never stopped anything, Minister, but be that as it may.

In terms of this legislation, though, I note that this doesn’t come into effect until 1 April 2027. The question is why this had to be passed under urgency. The Government has to put through an annual rates bill by 31 March next year. There was another completely suitable vehicle for this legislation going through. Now, I’m trusting that, in fact, I will be the person seeing that annual rates bill through the House, though the Minister might beg to differ. But nevertheless, it does say: why did this need to go through under urgency? It’s not as though it’s controversial. We know there are some issues to be sorted out. We also know there was a tax integrity issue that needed to be dealt with around charities. I would just like the Minister to let us know exactly: why? Why has it gone into Budget urgency?

21:00

Thank you so much, Madam Chair. I’ve remembered my second question now. My second question is around the amount of the entitlement ceiling in options 2, 3, and 4. I note that there is $4,500, $15,000, and then $100,000. It seems to be quite a broad gap between option 3 and option 4, and I just want to check if the Minister of Revenue has tested with officials on anything in the range between $15,000 and $100,000 in terms of additional balance that will both provide tax integrity and that of fiscal sustainability.

Just to say that both myself and my colleague Francisco Hernandez have got two amendments in there for, I think, roughly around $70,000 and $80,000, if the Minister wouldn’t mind considering that. Just to check with you, Madam Chair—oh, you know, I think the Minister’s ready to answer—just to signal that I’m ready to move on to clause 8.

OK, thank you.

21:01

Just in regards to the question from the member around Māori organisations, Māori are not expected to be disproportionately impacted. The member will note that. I’m not wishing to repeat again, but it is noted in the regulatory impact statement document in front of the member.

Dr Deborah Russell: why is it being passed under agency? Well, this Government places a high priority on certainty and it allows people to plan.

Madam Chair?

I do think from the period of time I’ve been in the House, I do believe that we have done clause 6. We’re moving forward, and Dr Lawrence Xu-Nan’s indicated that he wants to take a call on clause 8. Is this clause 8 or beyond?

No, this is my last question on clause 6, but I could keep it extremely short.

We’re moving on from charities. I’m going to go to Dr Lawrence Xu-Nan, and we’re up to clause 8 now. Thank you.

Thank you, Madam Chair, and thank you for that very clear signal. I want to check with the Minister of Revenue around clause 8, and I think I want to start by just kind of unpacking in terms of the calculation. I have a simple question, and I’m sure other people have additional questions. I just want to check, I’m trying to go through all of the regulatory impact statement for this bill, but the first one that jumped out at me is that the original consultation for this was back in 2016; why has the Minister waited? I guess, why has this come about now after 10 years? That’s my first question and I have broader questions later on.

21:02

I’m quite interested in this particular set of changes. They’re very rough. Well, basically, it’s some changes to the family scheme income for Working for Families tax purposes. Now, for everyone listening along at home, the way that Working for Families tax credits are calculated is that they’re calculated off the basis of looking at what a person’s family scheme income is. As I recall—I didn’t have time to look up the exact legislation, but family scheme income is basically taxable income, plus or minus some stuff. Those pluses and minuses are what we are talking about at the moment. The higher a person’s family scheme income is, the lower their Working for Families tax credit is; and the lower the family scheme income, the higher the tax credit.

So if we decrease family scheme income, we increase a person’s Working for Families tax credit and vice versa. That’s why this becomes important because we’re tidying up some stuff around the edges, but it does give people some tax advantages—it can give people extra tax credits or take them away from people. The calculation is complicated. There’s lots of pluses and minuses. For some of them, it is a good idea to tidy it up, so we do support this in principle, in terms of the tidying up. But what we want to be sure about are some of the particular pluses and minuses that have gone on here.

The first thing I want to ask is not the particular pluses and minuses—when we get on to clause 8. Again, all these adjustments apply from the 2027-2028 tax year—so that is starting on 1 April 2027—so, again, why did this need to go through tonight under Budget urgency? Now, the Minister of Revenue has said that, in actual fact, we need to provide certainty for taxpayers. That’s a very good point, except that that doesn’t quite stack up with some of the other stuff that’s gone on. For example, in the Budget announcements, it has been, very, very clearly signalled that there are some changes to fringe benefit tax and the way that cars are valued for fringe benefit tax purposes, but that legislation hasn’t appeared tonight. Perhaps taxpayers would like certainty around that as well.

So why is this particular set of legislation in here when the rules around fringe benefit taxes are not? There are some changes to the foreign investment fund (FIF) rules, now extending the revenue account method to all FIF taxpayers, and I’m sure that some of those people would like some certainty as well. In fact, it has been a regular complaint. I think the first tax inquiry I got into my office back in 2017 was someone who was upset with the FIF rules, and I agree that they needed to be changed, but how is it that that set of taxpayers don’t get certainty, but this set of taxpayers do. It does seem curious, the particular items that have gone into this tax bill and the particular items that have been excluded from it.

I don’t think certainty is going to stack up as an answer, Minister. Maybe the more straightforward answer is that we’ve just gotten so good at working our way slowly through tax bills as no one wanted to risk it.

21:06

Yeah, well the member would understand that the success for tax is that it is quite boring and we want to take things quite slowly, because when you rush, you make mistakes. I remember the good old days of the number of mistakes that I had to tidy up and go over, but anyway.

In regards to this, we need this in force by December of this year, which allows the Inland Revenue Department then the ability to put in place the processing systems to get this in place so that individuals can be aware in February of next year. If we put it, in effect, into the August bill, it won’t be passed until March or April of next year, and so that’s the reason. It is literally because of the operational need to have this ready by the end of the year.

The Hon Dr Deborah Russell—I hope the member’s recovered from—

21:07

—people saying that tax is boring! I thank the Minister of Revenue for that explanation, that’s a perfectly plausible and good answer, so I appreciate him giving it.

I do want to move on to all these adjustments to clause 8, “Section MB 1 amended (Adjustments for calculation of family scheme income)”. The first set of adjustments, “an amount derived by the person in the income year is not treated as exempt income if it is an amount referred to in section CW 32 (Maintenance Payments).”—phew! What it’s actually saying is that some overseas pensions and some salaries and wages paid under international agreements are treated as exempt from tax so that they’re no longer included in family scheme income. Remember that I said that family scheme income was based on taxable income, so if it’s exempt from taxation, it’s no longer included in taxable income. So that means it’s not counted as family scheme income either.

There’s a couple of questions there. The first one is: why treat those as exempt from tax? Are they fully exempt from tax? So they are no longer included in family scheme income? Does that mean that that income is completely tax free or is it only excluded from the calculation of family scheme income for the purposes of family tax credits?

21:08

Yeah, I’m just going to let the members know—I mean, there’s a huge pile of amendments that have come on to the Table here—I’m not going to be accepting any of those amendments. They’re not aligned with what we’ve talked about; this is reasonably narrow and straightforward. So we are going to be spending about half an hour going through amendments that we’re going to be declining. So just to give the member a bit of feedback.

21:09

I want to continue on, and I think that the Minister of Revenue wounds us by saying that this is not an exciting bill! I want to check. There were my earlier questions, and also, I’d like to just pick up where the Minister has left off. I understand the Minister is saying that this needs to be passed by December so that there is certainty for the IRD by March, but I wanted to check that, because this is going to be only for the tax year starting with the taxation year of 2027-28, it would mean that, for those families who we are looking at here, they are not going to be able to see the potential benefits starting from when they do their tax returns on 1 April 2028, which is quite a while in advance. Could I just check with the Minister that that is the correct interpretation and that families are not going to have that option until that far in advance? That’s my first question.

I wanted to pick up on what the Hon Dr Deborah Russell has mentioned in terms of the changes in clause 8(1), which is replacing section MB 1(2), and I wanted to just draw on the original in the Income Tax Act. That is part of section MB 1(2)(a), which is now to be removed, and it is the part about overseas pensions. I think that’s a really important part because there are different types of overseas pensions. There are the types of overseas pensions that are kind of like our KiwiSaver, and you can accumulate that, but there are also other types of equity or private schemes overseas. I know, for example, from a seniors perspective—one of the things that I get asked a lot by seniors with pensions overseas is that, while income is not means-tested as part of super, the overseas pension is means-tested as a part of superannuation. I just wanted to check whether this is something that also differentiates the different types of overseas pensions that we are seeing.

I do have questions for—I guess that I wanted to also check and see. Clauses 8 to 12 kind of cover this similar block, and so I’m just signalling to you, Madam Chair, that they’re all part of the same issue, and I will be kind of moving and weaving through some of that.

In that case, I’d encourage you to—because you can ask quick questions—go through that block of questions for those clauses, and that won’t prohibit the others from asking questions on those clauses.

OK, and I’m just signalling to you, Madam Chair, that that was the last part—pensions—that I needed to kind of set up a potential scene around. I will be asking more succinct questions from now.

21:12

I have just one follow-up question on this particular clause, around these overseas pensions and salary, which I hope the officials can give some advice on. I’m just wondering how much of that sort of income was being counted for family scheme income purposes and if they have any data on that, as to just how much money was involved in the first place, and whether or not this change has a big fiscal impact. My guess is that it doesn’t, otherwise we wouldn’t be treating it in this fashion, but it would be good to get some assurance around that.

Following on that line, clause 8(2) repeals a number of sections, and, ordinarily, I don’t really worry too much about repeals of sections, but in this case it does do that while moving in and out of family scheme incomes, and so it does have an impact. Again, by repealing section MB 1(5B), it removes the retirement scheme contribution exclusion from family scheme incomes, and the same question applies there, which is: does that increase or decrease family scheme income? Why is it a good idea to remove this from the calculation? How much of these retirement scheme contributions were going into being counted for family scheme incomes? Is there a reason for getting this exclusion in there?

I found this one quite hard to follow, in that we actually wanted to support retirement savings, and so there’s no point in then decreasing the amount of family tax credits that we can get, because that contribution is included in the family scheme income—which gets quite complicated without a whiteboard to draw it on. For those two questions for the Minister of Revenue, there is just a little bit of an analysis of the amounts of money involved, and then I actually have some rather more serious questions about the income equalisation scheme adjustment.

21:14

Just in regard to the questions in regard to clause 8—and this is also related to clause 12—the macro, or the bigger, picture here is that we did the discussion document around empowering families in 2025. We got a lot of feedback around the challenges and issues for families in regard to calculating the entitlements and the need to provide information around the income aspect. We did a costing around actually removing the entirety of looking at that other income. It had a fiscal cost of just under $14 million. We then said, “Well, we already have de minimis. Why don’t we increase the de minimis from $5,000 to $8,000?” We went for that option—that costs us $3,000, because, obviously, we’ve got very limited funds—but the feedback, and the feedback from the consultation, signalled that that would take a significant amount of compliance and pain out of this calculation process.

What we’re trying to do here is make it easier for families to be able to comply and get this option. We also recognise and acknowledge that there are going to be a range of income adjustments required, and with a de minimis that is higher than the status quo, that allows more flexibility. That’s what’s going on here. It’s actually quite straightforward and simple, and I’ll leave it there.

21:15

I take the Minister of Revenue’s point that this is in some ways rats and mice, there’s not a lot of money involved fiscally, and it does actually make life a lot easier for people who are trying to do their family scheme income calculation. I accept all that.

I do, however, have some rather more serious questions around repealing section MB  1(5D) and (5E), and both those subsections in the Income Tax Act mean that deposits to income equalisation accounts aren’t included in family scheme income. Now, it takes a little bit of explaining. Businesses in the primary sector have access to income equalisation schemes. Very roughly, how that works is that in a high-income year, rather than copping those higher tax rates at higher margins, a primary sector operator can pay some of what they have earned into an income equalisation account, and in a subsequent year they can pull it out and it comes back into taxable income again. It has to be actual money paid over. It’s held on trust, and the policy justification for this—it looks like it’s an outrageous concession to the primary sector, because you can manipulate your taxable income doing this, but it’s not.

Look, in the primary sector, as we know, people are subject to droughts. They’re subject to all sorts of—

Labour Governments.

Actually, farmers always do better under Labour. They’re subject to all sorts of—

Oh, withdraw and apologise—withdraw and apologise!

Take a call—take a call. They’re subject to all sorts of events that mean that their incomes can fluctuate for reasons beyond their control, and it does make sense. The difficulty is that there doesn’t have to be an external event triggering whether or not a person may use an income equalisation scheme, and, anecdotally, I know of some of my own relatives, actually, who have used income equalisation accounts to ensure that their family income was down below a sufficient level so that their children could get the student allowance, and things like that. Anecdotally, it does give the capacity to change one’s income levels around in response to events that are not necessarily the ones for which the scheme was intended.

I understand why the Minister might want to include these income equalisation accounts in this calculation, but, to me, the difficulty is that unlike those other factors which have been taken in and out of the calculation for family tax credits, and the deposits into income equalisation accounts or withdrawals from it, it does lend itself to a degree of—I wouldn’t call it “aggressive”, but a degree of tax structuring, shall we call it? I’d like to know what advice the Minister received around that, to what extent there is data around how much income equalisation accounts are being counted or not counted in terms of family scheme income already, and, obviously, what the fiscal impact is. I just feel as though this does open it up for a little bit of mischief around Working for Families tax credits, and I’d like to hear at least a little bit of the advice that the Minister received on that.

21:19

Thank you, Madam Chair. As per what I’ve said before, I have just a couple of quick questions. The first one to the Minister of Revenue is this: in the regulatory impact statement, I can’t see anything at this stage on the overseas pensions bit, as well as the superannuation bit that we see in clause 10. Would the Minister just quickly point me to where in the regulatory impact statement I would find any information on that?

Just in regard to the overseas pensions question that was raised before, the overseas pensions are excluded from the family scheme income, which affects the Working for Families tax credits. There is a fiscal implication for that of around $3 million over the forecast period. The member was also referring to the different types of pensions and whether that changes the deal with the different types in that context. The answer is yes. It applies broadly to overseas pensions for family scheme income, but only in terms of Working for Families—I’m not really giving page numbers.

21:20

No, actually, thank you, Minister; that is already incredibly helpful. I want to check with the Minister again, very quickly, on clause 10, because it also relates to the superannuation scheme and pensioners. Does that mean that the superannuation scheme is exempt from calculations for the family scheme income as well—that’s the domestic superannuation scheme? I just wanted to check—

Keep going—keep going. The Minister will get up and answer the question. I know you had a couple of extra questions—

Yeah, just a few; very quickly. Thank you for the response on overseas pensions. Can I just check with the Minister as to whether there has been any consideration if, then, the overseas pension is not considered to be the family income scheme, and, as a part of this bill, has the Minister also considered changes to the superannuation scheme where overseas pensions will also be excluded from the superannuation scheme, so that way, people’s superannuation here will not be means tested as a result of receiving the overseas pension? That’s just my final question for the time being.

21:21

I have a question on this; it’s not quite so much on tax, but it’s clause 13. It talks about a family scheme income from employment benefits, and it’s around employees not controlling shareholders. In this particular clause, it’s the income year which can be specified by the Governor-General. It’s done by Order in Council. That seemed odd to me. Let me just check that I had copies of the source legislation—I’ve lost track of it. I couldn’t understand why this was having to be done by Order in Council. It seems an odd way to do tax law. I know we do it in various places, but it just seemed to me to lend itself to some kind of, I guess, manipulation. I wanted to know why this particular change could be put in place by Order in Council instead of it just going through the tax law, as you would expect it to be going through legislation. There are, after all, many tax bills every year—a couple of them—so it seems odd to have something that could be put in place by Order in Council.

21:23

Very similar to the Hon Dr Deborah Russell, I too want to move on to clause 13 and clause 15. Going a little bit further from what the Hon Dr Deborah Russell said, I want to know more about “by Order in Council” —number one, because we haven’t had a chance for this to be examined by the Regulations Review Committee. I’m also concerned in terms of some of the regulation-making power that we do see here, because what we are saying is the intention of this section is that, by Order in Council, the Governor-General is, on the recommendation of the Minister, able to make certain changes to some of the things we have just been discussing, in terms of the exemption, or in terms of—what’s the term that the regulatory impact statement used?—the declaration, or things that no longer need to be declared.

I wanted to check with the Minister of Revenue: has the Minister explored whether this a “Henry VIII” clause? It does seem that the regulation-making power goes beyond what is expected and makes changes directly to the primary legislation in terms of exemption. That’s for clauses 13 and 15.

21:25

Thanks, members. It looks like we’re coming to the end of this, which is good. Income equalisation structuring—I did consider that, Deborah Russell, and it’s not considered a high risk; that’s because of the fiscal impact being $3 million. Dr Lawrence Xu-Nan—are super schemes exempt? Yes, they are exempt. You had another question around superannuation and pensions in relation to Working for Families. That’s not in the scope of this bill.

I just want to—sorry, Dr Xu-Nan, have you discussed section MB 10?

Very briefly.

Very briefly. Sorry, I just want to check—

She’s thorough!

I’m thorough. This section in the original legislation excludes some exempt income from being included in family scheme income, so the effect of the repeal is to decrease the amount of family scheme income and, therefore, to increase Working for Families tax credits, I think, as I worked it through.

That’s right.

There’s some reassuring nods there. But, you know, this is still money that is coming into a household, so I’m sort of wondering why we’re excluding it from the family scheme income. It’s quite interesting looking through this particular piece of legislation around the family scheme income and what’s counted and what’s not counted, and to me it’s a little bit reminiscent of the definition of a dividend. If you look at a definition of a dividend, you’ve got the basic definition, and then you’ve got all of these things added to it over time as people have found ways around the law.

I’m wondering if this was a section that was there right from the start, or if it was brought in at a later stage because people were aggressively tax planning around their Working for Families tax credits. It’s just trying to track down, again, I guess, that broad overall question of: are we being fair here? Working for Families tax credits do get changed around because of the amount of income in a household. If we are excluding some income that a particular household is getting, is that fair to the household next door, and so on? It’s a fairness question sitting in there.

21:27

Yes, I mean, in short, we are, by increasing the de minimis, providing more flexibility for families—acknowledging this is a complex and difficult area. More de minimis gives them some more optionality and more flexibility and, therefore, at one level, more fairness in the context of complying.

The member also asked around Orders in Council. Primarily, the mechanism there in this instance is the ability to actually move faster and in a more timely manner to deal with any integrity issues that are identified with the adjustments—again, the annual rates bill that we will be tabling, with a number of announcements that we’ve made today, will miss the December implementation date.

21:28

Just signalling, Madam Chair, I’ve got one final question on clause 16 of this bill, regarding the de minimis, and then I’m happy to move on to, I think, the final block of Part 1 of the bill, which is around the Working for Families residence requirement.

The final question I have—thank you, Minister Watts, for your explanation—I do see in paragraph 16 of the regulatory impact statement where it talks about increasing the de minimis from $5,000 to $8,000, due to inflation. Has the Minister considered increasing it even further than that—for example, to $10,000?

Yes, and I answered that before. It was fiscally not within the bounds we had available.

There is one final set of changes that we do need to discuss, at least a little bit, and they are the changes around the residence conditions for Working for Families. Ordinarily, for tax purposes, we worry about not residence as it’s defined by visa requirements, and so on; we worry about tax residence, which is calculated in a different way. Given that these are tax credits, we’d expect, for people to be eligible for them, for it to be done around tax residency, but this particular legislation now changes that. It says, “No, we’re not going to worry about tax residency any more. We’re going to have a different set of residency rules for eligibility to claim Working for Families tax credits.”

I wonder if the Minister of Revenue could please explain the reasoning behind that, because it’s quite an interesting thing to do within a tax Act—to step away from the tax residence rules. Could he tell us why this is a more appropriate way to go when it comes to determining the eligibility for Working for Families tax credits?

21:30

I’m happy to do so. The basic premise here is that the residence requirements that we’re putting in place ensure that Working for Families is only paid to families who are living in New Zealand. That is to, therefore, help them with the costs related to raising their children. These rules are difficult for some customers to understand and, therefore, for IRD to apply. The reality, and what IRD has observed, is that there are instances where individuals are leaving New Zealand. Hence, by leaving New Zealand it puts at risk the principle that I’ve just noted, and hence we’ve put a limit on the amount of time that you are able to be outside of New Zealand before the Government stops paying this. Again, I think that’s reasonable based on the premise I’ve just outlined.

21:31

Thank you, Madam Chair, and thank you to the Minister of Revenue for that answer around what has been put in this legislation. There are some quite detailed definitions and scenarios, actually, given in the commentary on the bill, and I think they’re very useful. They do go through a number of reasons why people could be away. In developing these certain trips that are within 42 days of each other, the 42-day requirements, and an absence of more than that, I just wondered whether or not this was a period of time that the Minister chose to align with other requirements in other pieces of legislation around physical residency in terms of the ability to receive pensions or other transfers within the welfare system, and whether that was something the Minister took into account when reaching these definitions.

21:32

Yes, the Minister of Finance did take into account those factors. We also considered a wide range of reasons why individuals do need to leave New Zealand, such as seeking medical care and attention overseas, and other complexities in regard to serious illness and injury, etc. We did a wide range of assessment around that and we landed on this, also taking into account the precedent.

I’m going to take a call from Dr Lawrence Xu-Nan, but I do want to remind the people to my right that this is urgency and this is the first opportunity that the Opposition have had to see this, and we are working our way through methodically, and I’m happy that it’s progressing.

Thank you, Madam Chair. Just on what the Minister of Revenue was mentioning, I know that I’m jumping a little bit but since we are on that topic—this is clause 18, “New sections MC 5B and MC 5C inserted”.

In section MC 5C(4), we are looking at “Absence for other events”. I understand we’ve discussed more around the 42 days, but this is the part that drew my attention, because all of these refer to either the person or the child, or a family member, seeking medical treatment that is not available in New Zealand. I want to check in terms of paragraph (b) specifically: if we get a situation where we have a migrant family—for example, my generation—whose parents are potentially back in China or India or another place, and they cannot be here, would the person or the child seeking medical treatment not available in New Zealand also encompass family members to the person or the child who actually cannot be in New Zealand for treatment because they have no eligibility to be having treatment in New Zealand?

That’s quite important because if, let’s say, people from the migrant communities need to go back because they are the only child and their parents are, for example, in China—they have to go back and look after their parents when their parents are going though medical treatment—their parents technically can get medical treatment that’s available in New Zealand but they cannot be in New Zealand for medical treatment because they have no eligible visa status. Would that scenario be considered under subsection (4)(b)?

21:34

I am likewise interested in this “crisis event”, as to what constitutes a crisis event. This is new section MC 5B(7), in clause 18, and it states, “(a) means an unexpected global or regional event; and (b) includes an act of war, terrorist activity, political or social unrest, pandemic, or industrial action;” but it’s not expected if “(i) while the person or child was present in New Zealand, the New Zealand Ministry of Foreign Affairs and Trade had published a warning not to travel to a country affected by the event; and (ii) the person or child travelled to that country regardless of the warning.”

Those all make sense to me. I just want to check—it means “an unexpected global or regional event” and it includes those things. Is that an exhaustive list, or is it possible that there would be other events that would prevent travel? Here, I’m thinking of things like significant weather events taking out airports and things like that, which is entirely possible. I just want to know whether that’s an exhaustive list or just a list of the types of things that could be considered a crisis event? I think we’d all accept that a hurricane is a crisis event, but I want to know whether it’s sufficient to count in terms of its being a crisis event in terms of Working for Families tax purposes.

21:36

Just to round this out, I think it would be unreasonable to try and define fully every unexpected event. What has been done here, when you talk about natural disasters, floods, bushfires, earthquakes, regional or global crisis events, is giving a signal of the degree of materiality of that unexpected event, in addition to medical attention not available in New Zealand, overseas, or taking care of a family member with serious illness or injury. We’ve gone across what you would expect would be the normal instances of that scale, and I don’t think there’s too much more to be added.

Thank you, Madam Chair. I’m still waiting for the Minister of Revenue’s response to my question, which is not related to the emergency events but more related to the eligibility criteria under new section MC 5B, inserted by clause 18. That is an important question, and I want to check on that, looking at the fact that there were limited consultations according to the regulatory impact statement. Has, for example, even the Ministry for Ethnic Communities been consulted as a part of this process? Frankly, that’s probably the one community that would be most affected by the changes we’re seeing here. That would be my second question.

My third question: when we’re looking at the fact that the seven weeks—I’m just checking to see if there is any rationale for the 42 days that’s been given. I think it just says, based on the commentary on the bill, that 42 days is seven weeks, but I can’t seem to locate where it actually specifies why that is the case.

21:37

Thank you, Madam Chair. I’m interested in proposed new section MC 5C(4), in clause 18, and section MD  7C(4), in clause 20, which would treat a principal caregiver or dependent as being present in New Zealand if they are overseas for more than 42 days for “any of the following reasons”, and one of those reasons is the death or serious illness or serious injury of the principal caregiver, dependent child or family member, or if they are seeking medical treatment, and a range of other things.

I’m just interested in the interplay with the earlier rule in MC 5B(7), which specifically excludes “an event would not be considered unexpected”. So, for example, if someone went because of the death or serious injury of a family member and it was to a country that had a “do not travel” or red flag from the Ministry of Foreign Affairs and Trade, and while in that country a crisis event occurred—a pandemic, an act of war, a terrorist activity, political and social unrest, or industrial action. I won’t ask whether industrial action, such as an airline strike includes whether or not you’re willing to cross the picket line—I won’t ask the Minister of Revenue to answer that question. But I am interested in how those two areas intersect and whether, if you have gone to a country with a red flag for one of those reasons, you’re still excluded from those provisions.

21:39

Thank you, Madam Chair. I’m just seeking the Minister of Revenue’s engagement on my previous questions. I do have another question which is around this definition around the person, the dependent child, but, again, what I’m not seeing is the clarity in this bill. Again, noting that we’re just kind of trying to quickly analyse the bill urgently just this evening. What happens when you have a couple where one person and one dependent child is overseas, but the other spouse and potentially another dependent child is here in New Zealand? What happens then? If one half of the family is away for over 42 days but the other half of the family is here consistently, are they going to get half of the Working for Families scheme family credits or are they just not eligible altogether?

Madam Chair.

The honourable Minister.

Ha, ha!

21:40

I was just stretching there, Madam Chair. Anyway—Dr Lawrence Xu-Nan, I’ll just come off, just to finish this off. I do appreciate the questions. This was around the migrant family question. So the example given is covered by the bill. The family would not lose their entitlement to credits. The question around agencies engaged: yes, as part of the Budget process, the Ministry for Ethnic Communities and other agencies were engaged. You also had a question around the 42 days aligning to anything which links back into school holidays, for example, and also Working for Families supports households with children of school age in most cases. That’s why the 42 days is school holidays. So that’s the logic behind that. Thank you.

21:41

I move, That debate on this question now close.

Mariameno Kapa-Kingi’s tabled amendment inserting new clause 3A is out of order as not being in the correct form of legislation.

The question is that Dr Lawrence Xu-Nan’s tabled amendment replacing clause 4 be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 5(1), new subsection (9B) of section EW 29 be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 5(3) replacing “4 December 2025” with “1 July 2025” be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 6(1) replacing “$100,000” with “$80,000” be agreed to.

The question is that Francisco Hernandez’s tabled amendment to clause 6(1) be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 6(2) replacing “1 April 2027” with “1 April 2026” be agreed to.

The question is that Mariameno Kapa-Kingi’s tabled amendment inserting new clause 6A be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment deleting clause 7 be agreed to.

The question is that Mariameno Kapa-Kingi’s tabled amendment to clause 8 inserting new subclause (1A) be agreed to.

The amendments lodged by Dr Lawrence Xu-Nan and Francisco Hernandez to clauses 8, 9, and 12 to 16, which relate to family scheme income, to change the application dates of the amendments from “2027-28” to “2026-27” are a single proposition. I will put a single question on these amendments.

The question is that Dr Lawrence Xu-Nan’s tabled amendments to clause 8(4), 9(4), 12(4), 13(3), 14(2), and 15(3), and Francisco Hernandez’s tabled amendment to clause 16(2) replacing “2027-28” with “2026-27” be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 13 deleting subclauses (1)(a) and (2) be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 15 deleting subclauses (1)(a) and (2) be agreed to.

The question is that Mariameno Kapa-Kingi’s tabled amendment replacing clause 16(1) be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 16(1) replacing “$8,000” with “$10,000” be agreed to.

The question is that Francisco Hernandez’s tabled amendment to clause 16(1) replacing “$8,000” with “$11,999” be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 17, new section MC 5(1)(b) replacing “all” with “any” be agreed to.

The question is that Mariameno Kapa-Kingi’s tabled amendment inserting new clause 18A be agreed to.

The question is that Mariameno Kapa-Kingi’s tabled amendment inserting new clause 22A be agreed to.

Members, the time has come for me to leave the Chair. The committee is suspended until 9 a.m.