Hon PHIL HEATLEY (Minister of Fisheries and Aquaculture) Link to this
I move, That the Taxation (Canterbury Earthquake Measures) Bill be now read a second time. To recap briefly, the bill introduces a range of tax measures to assist people affected and help with the recovery efforts in Canterbury following the earthquakes there. The changes proposed include income tax and gift duty relief on trading stock businesses that have donated to the earthquake relief fund, making certain welfare contributions made by employers to their employees tax-free, extending the redundancy tax credit from its current end date of 31 March to 30 September 2011, and ensuring certain payments do not count as income where families receive Working for Families tax credits.
The objectives of these changes in the bill are, of course, to help people. I am confident that the proposals in this bill will be helpful and practical. In March this year the original proposals for this bill were publicised. These attracted comment and suggestions from taxpayers and tax professionals, which resulted in the eligible period for donated trading stock being changed from the original 4-month period for either earthquake. The bill proposes that trading stock donated in the period from 4 September 2010 up to 31 March 2012 will be eligible for the exemption. This change to support the realities people are facing in Canterbury gives me confidence that the measures this bill proposes will provide the help and support that people there really, really need. I commend this bill to the House.
Hon CLAYTON COSGROVE (Labour—Waimakariri) Link to this
As we said in the first reading of the Taxation (Canterbury Earthquake Measures) Bill, and as it appears from the vote in its first reading, there is unanimity on this bill. It is one of those unique times in this House when we all agree. As the Minister of Fisheries and Aquaculture on behalf of the Minister of Revenue said, the bill ensures that people do not have to pay tax on donations they received from employers to help them in the wake of the earthquakes. My colleague Ruth Dyson raised an interesting question, which we will be pursuing in the Committee stage. Under the law in respect of the Earthquake Commission, there are now, I think, four—although I may be incorrect—registered or recognised earthquake events. There was 4 September, obviously; Boxing Day; 22 February; and amongst those, there was—and I recall it, because it was a jolt—a 5.3 magnitude earthquake on a Saturday evening that I think is also recognised as an official earthquake event, although I could be wrong.
The question that arises out of this—and we do not inquire out of any malice or disrespect; we want this legislation to be as robust and effective as possible—that my colleague Ruth Dyson raised is it seems to encompass only the two major events, which are the 8 weeks post - 4 September and the 8 weeks post - 22 February. I am sure the Minister will want to get his officials to rapidly provide him with an explanation in the Committee stage. It seems to us to present a slight anomaly. It is appropriate that this bill exempts employers and others who have been generous and have perhaps paid over the odds in terms of some income or have made some in-kind donations or given support to employees and others in respect of the two major events. However, I am sure there are employees and others who may well have been impacted or have suffered as a result of the third or possibly fourth—if it is recognised—earthquake events. It seems to me in terms of consistency and also logic that this bill applies to those events.
There is, as I understand it, a future-proofing clause in the legislation to allow for the Commissioner of Inland Revenue to trigger these provisions for future events—such as, perhaps, for example, the Napier floods had they been of a significant proportion; or, indeed, as I said before, the tornado in the North Shore had it been of a significant proportion. The question is why those other official events are not contained within the bill—or is there some other provision? If the intent was to do that, and that has been missed through misadventure or a slight oversight, will the provisions be amended by the Minister to ensure that those other events are catered for?
Likewise, it could be the case before this legislation is passed—and we do not wish this on anybody—that there is another official event. The jolts we get in Canterbury seem to be quite regular. We just want some assurance as to why those other historical events have not been included.
There are some other issues in this legislation in respect of some of the technical points that will be raised in the Committee stage. I am interested to know the number of people—a likely projection, if there is such; if we know or we can make a projection—who will be positively affected by it. I am also interested to know what level of declaration is required by businesses. I can give an analogy that may assist the Minister, who I am sure is listening. In Rangiora we had a group called the Rangiora Express that materialised. Rangiora is their patch; it was like Rangiora’s own air force. A couple of fantastic chopper pilots emerged out of the ether under the stewardship of one Jayne Rattray and a number of other people. Jane is a local in that area. They decided they wanted to help people after that 22 February quake. A large number of donations were made by a number of organisations, and I also know that a number of companies made a significant number of in-kind donations to their own employees. We would like to know what sorts of accounting processes have to be put in place in order for those issues to be addressed to satisfy the requirements of this bill. Whilst I note that this is an attempt to cut down red tape, businesses may be in a position where they do not have—possibly through the effects of a natural disaster—the ability to account for those goods and services in respect of GST, income, etc. I think that needs to be addressed, perhaps more properly in the Committee stage.
There are also issues in respect of advertising and promotion to make commercial organisations aware that this exemption, if you will, or this facility, will exist. What guidance will be provided to organisations, given that we are not in a “business as usual” period?
Hon CLAYTON COSGROVE Link to this
Before the dinner break I was in the process of raising a number of questions. As Canterbury members on this side of the Chamber have spent the dinner break diligently researching a number of issues in respect of this bill, there is one thing I and colleagues would be interested to ask the Minister, or to get some background from the Minister about. The purpose of the bill is stated as being to create tax exemptions for businesses donating trading stock to people affected by the earthquakes. A question arises as to what level of accountability, paperwork, declaration, and administrative activity will be required, presumably, to account for that. I was in the process of using as an example the Rangiora Express. For the uninitiated, I will explain that the Rangiora Express started its own, as it were, air force. Helicopter pilots were engaged to fly hot meals to the eastern suburbs of Christchurch in the Hon Lianne Dalziel’s electorate. As part of that initiative I recall that the local McDonald’s shop, or whatever—
Hon CLAYTON COSGROVE Link to this
No, it was not the Double Down burger. I am told that there is another member of this House who is more proficient in takeaway food than I am, I say to my colleague, but I do not believe that he is within the precinct. Anyway, that food was donated, and the question then arises, say for that business, as a lot of material and food was donated by other providers and businesses, as to what level of accountability is required to account for that product so as to gain this bill’s tax exemption. I am assuming that the intent of this bill is actually to cut down any red tape and to make it administratively easy for those businesses to get through this. As a colleague said, and I think it might have been Brendon Burns, in the hours and days after the 22 February quake, especially, businesses moved very swiftly to donate. We would ring them, and Heller Tasty donated smallgoods, Verkerks, in my patch, donated smallgoods, and other businesses, when we rang and asked, simply donated products and services. Frucor, the local bottled water manufacturer in Kaiapoi donated hundreds and hundreds—thousands, probably—of bottles of water, just to get it done and to assist people.
An issue arises about what the technical mechanics are for accounting for that. It may be that, due to the nature of the quake, businesses did not, through loss of records or whatever, have an ability to account for it. I ask whether there is any flexibility within this legislation to deal with it.
The other point we raised was one of promotion. What sort of advertising, promotion, and material will be provided to educate businesses and others so that they can take advantage of this exemption? I would be grateful if the Minister, in due course, could address those issues.
Hon KATE WILKINSON (Minister of Conservation) Link to this
I am pleased to stand and speak in support of the Taxation (Canterbury Earthquake Measures) Bill at its second reading. This bill is one of a number of actions the Government is taking to support Cantabrians and help rebuild Christchurch and, indeed, Canterbury. Yesterday’s Budget revealed even more the extent of that support, to the tune of $5.5 billion. This bill is practical. Many words have been spoken in this House about the September and February earthquakes. They are certainly events that will never be forgotten.
This bill represents another concrete action to provide help where people could be negatively affected by current tax law. As we have heard, the main features of the bill include an exemption so that businesses will not have to pay tax and gift duty on trading stock they have donated up to 31 March 2012 for relief from the effects of both Canterbury earthquakes. Also exempted from tax will be certain welfare contributions provided by employers within 8 weeks of either the September or February earthquakes. The other two matters in the bill extend the redundancy tax credit to 30 September 2011 and provide the Commissioner of Inland Revenue with the power in emergency situations to exclude certain income from counting for Working for Families entitlement purposes.
This Government continues to work hard to rebuild Canterbury and provide all the assistance necessary to the local communities. The $5.5 billion for the new Canterbury Earthquake Recovery Fund announced yesterday is obviously a big part of that too. We are talking about spending on local infrastructure and social services. We are talking about roads, water, schools, hospitals, welfare support, and wage subsidies. This is $5.5 billion that will go directly into the Canterbury region. As for jobs, this money will bring with it employment. It will see tradespeople and support services flowing into the region, with locals to be the first to pick up the jobs they need.
Rebuilding Canterbury after two particularly nasty earthquakes will be a long and difficult task. For many the grief remains very real and personal, but we have to move forward and rebuild our lives and our region, and this Government is committed to providing the resources to do that. To break down that $5.5 billion a little more, we have $1.1 billion already allocated to local infrastructure, $85 million on assets such as schools and hospitals, $521 million on welfare and emergency support, and $3.2 billion in the back pocket for future decisions such as land remediation and as needed for further infrastructure.
It goes without saying that everyone would prefer we never had to endure either of the September or February earthquakes, or the aftershocks. We would love to spend a nice, sunny autumn day walking down Cashel Mall and eating at a local cafe, but our reality has changed and now we get on with what needs to be done. This Government is working hard for Canterbury. This bill forms part of the overall picture as we continue to respond to the circumstances people are facing. There is quite some way to go yet, but piece by piece this Government is providing the necessary tools and resources to help Cantabrians reclaim their lives and move forward. This bill is part of that toolkit, and I support the bill.
Hon RUTH DYSON (Labour—Port Hills) Link to this
Thank you very much for the opportunity to take a call in further support of the progress of the Taxation (Canterbury Earthquake Measures) Bill. I was interested in the comments that the member who has just resumed her seat, the Hon Kate Wilkinson, made in respect of business payments. She was not referring to the bill that we are discussing, but that is all right. She was really drawing other related matters into the debate, and I am not criticising her for that, but she did talk about the huge amount of money in the Budget that was going towards business support. That is quite a revelation for the House, because to the best of the public understanding, the business support is finishing in just 2 weeks’ time. I am sure that her words about how much extra financial support is going into business support will be warmly welcomed. I urge her to give us proper details of that package during the Committee stage, because the business people who have finished their day and are at home listening to this debate—if they have the power on, and if they have nothing else to do with their lives, which is quite possible at the moment in Christchurch—will be very interested to know the details of that support. So I urge the member who has just resumed her seat to get to the details of the package that she has announced, and share it with us during the Committee stage or the third reading debate tomorrow morning.
As I said earlier in this debate, Labour supports the progress of this bill. We have had a series of earthquakes, which have caused widespread devastation and trauma to people. I am still concerned—and I hope the Minister of Revenue is able to comment on this matter during the Committee stage—that this bill is restricted to two earthquakes, one on 4 September and one on 22 February, because we had a third and quite substantial one on Boxing Day. That earthquake had a large impact on many people, and it will fall outside the 8-week time gap that this bill imposes. That would be a mistake. I am sure that that is not deliberate, because this bill is intended to help Canterbury people. It is meant to recognise the huge generosity that we have been overwhelmed with from people within our region who have not been affected directly by the earthquake, and from people up and down the country. We have had Aucklanders and Wellingtonians supporting us, as well as, of course, people from all the parts in between, and from the rest of the South Island. We have had people, internationally, supporting us. We even had people from Japan offer financial support to Canterbury, after the devastation in their own country. It was more than a little moving; it was truly humbling to be supported in that way. So for the Government to now come to the party—it is the middle of May, 8½ months after the September quake, but that is OK; I am sure it has been busy—and say it is prepared to back the people who have donated goods and have supported the people of Canterbury and exclude them from tax duty from other taxes is a really good move. So we certainly support that.
I have some other concerns, and I briefly mentioned some of them earlier, but I want to put on the record the fact that I am also concerned about the redundancy tax credits. It is great to see that people who have been made redundant as a result of the earthquake will have their tax credit for redundancy payment pushed out by a few months. It is not great, actually; I used the wrong word. It is just fair. What I do not understand is that if it is fair for Canterbury workers who have been made redundant as a result of the earthquake to have their tax credit payment on redundancy payments pushed out by a few months, why is it not fair for every other New Zealand worker who is made redundant up and down the country? We see redundancies literally every day under this Government. Why is it not fair that those redundant workers have their tax credits pushed out altogether? It is an outrageous imposition on people who are going through a very bad time in their lives. They have just lost their jobs, not because of anything they did wrong but because the business they have been employed in—perhaps they worked very hard for very many years—is not able to employ them any longer. This is an opportunity, and I challenge the Minister of Revenue, the Hon Peter Dunne, to put forward a Supplementary Order Paper during the Committee stage—it would be supported by Labour—to eliminate those tax credits altogether. It is hard not to compare how long it has taken the Government to advance this very straightforward and relatively inexpensive bill with how long it took for three tax packages worth $23 billion to be pushed through the House under urgency since the Budget. It really shows that National has different priorities compared with Labour.
When people are in a state of trauma and in critical need, it is really good to be able to step up quickly and help them rather than wait for such a long period of time. Certainly, the focus should always be on the people who are trying hard and working hard but not getting much financial support. They are the people who should be better supported by the Government, not the people who in last year’s tax cuts—people like the Prime Minister and the Deputy Prime Minister—received an additional $1,000 a week. That is more than many people in Canterbury are earning. They got not $1,000 a week but an additional $1,000 a week on top of their salary as a result of last year’s tax cuts.
As I mentioned earlier, we will raise some questions during the Committee stage, and I hope that the Minister in the chair is competent to answer them or at least take the opportunity to do so. Although we support this legislation, and we are not opposing any of the intentions, we note that this tax legislation has quite a lot of detail in it. Members will notice the level of detail when they start looking at new sections CZ 23 and CZ 24, or GZ 3, or MB 13(2)(q), which is a really interesting new section that the bill inserts into the Income Tax Act 2007. When we start talking about that level of detail, we should try to get it right. It will be beholden on the Minister in the chair during the Committee stage to pay attention to the debate and make sure that we do get it right. This is not just tax legislation; it is retrospective tax legislation. There is no indication in the bill as to how many people it will apply to. If the officials know that, it would be good for the Minister to take a call and give us that information. We do not know how the measures will be applied or whether people have already paid tax for some of the goods that are covered by this legislation. Will they get a refund or will they just have an abatement on their next tax bill? What if people have not put in a tax return? Do they have to file one? What are the forms like? How much bureaucracy are we putting Cantabrians through in order to get this great gift from the Government? Is it worth it? We do not want a lot of red tape, and we do not want a lot of forms. As Amy Adams said earlier in this debate, we have new rules now. We do not like people delaying progress. We do not like people putting barriers in our way to getting help and support and getting on the path to full recovery.
The final point I want to make is in relation to another major concern we have in Canterbury, and it was highlighted during the passing of the Canterbury Earthquake Recovery Authority legislation, which, again, was rammed through Parliament with very limited time for consultation. Only invited submitters were able to have their say, and that was only after a lot of battling with the Minister for Canterbury Earthquake Recovery. The other concern we have, which the Minister might like to allude to during the Committee stage, is the power of the Minister, Gerry Brownlee, to instruct our three local authorities to sell some of the assets they hold. No amount of tax concession, abolition of tax credits on redundancies, or reduction of tax duty in any regard of donations in this legislation would make up for the anger that Cantabrians would feel if their assets were ordered to be sold by the Minister for Canterbury Earthquake Recovery.
I am pleased to be part of this bill. I am sorry that it has come so late, but it is a good bill. I hope it is easy to administer. I hope it adds to the support we have received from around the country, and I put on record my appreciation to the Minister for introducing it.
KEVIN HAGUE (Green) Link to this
I begin by quoting my colleague Kennedy Graham from his general debate speech on 11 May: “We do not yet know precisely the nature of the land in our brave new world. We have had two massive earthquakes and half a dozen major aftershocks. We have had 6,989 ripples”—I think we are over the 7,000 mark now—“large and small, as the land reconfigures and settles down to the new tectonic era. We know that the peninsula has jerked up by a metre, the estuary has gone sideways a bit, and the flat land has sunk by perhaps one-quarter of a metre. But is that the end of it? We do not know. We do not know how many more aftershocks we must endure, or whether they will flatten out within a year, a decade, or more.”
The series of earthquakes, in fact, over this extended period has been a crisis without parallel in New Zealand’s history. The Green Party has been doing its bit on the ground from day one, with efforts towards fund-raising. We have been shovelling silt, delivering food, going door to door assessing people’s needs and helping them, and now Dr Graham is holding a series of public meetings to look at what the future of Christchurch will be.
Throughout that time one of the things we have appreciated is the opportunity to work with other parties, and we would like to express to Mr Brownlee our appreciation for the times that it has been possible. We think, though, that that cross-party work has been patchy, and we would like to see it improved.
Similarly, we think one of the crucial elements in the rebuild of Christchurch and in the relief work for people in Christchurch and Canterbury more generally has to be democratic participation. Again, we thought it was great when that was able to occur, but we note that it has been patchy and that decisions have been made about Canterbury and for Canterbury people without involving those people, and we think that is poor process.
The Green Party, as my colleague Sue Kedgley indicated in the first reading, supports the objectives of the Taxation (Canterbury Earthquake Measures) Bill and certainly will be voting for it. We think there are some improvements that can be made, and I think one of them would be around the restricted scope of the tax relief measures that the bill sets out in terms of the duration of just those two particular earthquakes against the context of a series of very many earthquakes, each of which has caused damage, and each of which has caused trauma, pain and suffering, and loss to the people of Christchurch and of Canterbury.
The task of coping with this earthquake and its aftermath is, as I say, an unprecedented one. It is interesting that the Government itself invites a comparison with this year’s Budget, which we have just heard. The Green Party has proposed what we believe is a fiscally prudent approach to some of the costs associated with the Christchurch rebuild and some of the costs associated with the recovery of Christchurch people. Although the tax measures that are set out in this bill will provide some value, and will actually assist people in getting on with their lives, other things could also have been done. In particular, we have proposed a suite of three measures: a temporary, modest levy; some additional borrowing; and reprioritisation of Government expenditure to assist with some of the costs associated with the earthquake. We think it is a shame that the Government, so far, has chosen not to take up that approach.
In this abbreviated second reading speech I will come to some of my concerns about the democratic process in relation to this bill. As I indicated, when people are traumatised, when they have already been damaged by the events caused by the earthquakes themselves, their exclusion from processes and decisions that will affect them in their recovery from those earthquakes is actually a double victimisation. One of the concerns that the Green Party has about this bill, although we support its objectives, is that the Government has not taken the opportunity to have even an abbreviated select committee process in which the people of Christchurch and the people of Canterbury could have had their say about it. We think that is a major concern. There is no reason why the Government could not have done it. The bill was tabled on 4 May, so there was plenty of time for such a process in the intervening period. It is a shame that that opportunity was not taken.
That comes hard on the heels of a bit of a history from this Government of poor process that has excluded people in Canterbury. I guess the Canterbury Earthquake Response and Recovery Bill was the most recent predecessor. Once again, Canterbury people were excluded from that process, very largely, with the exception of a cursory select committee process in that case. Once again, there was absolutely no need for that to have occurred. The other example that I want to draw to the House’s attention is the termination of the Environment Canterbury councillors and the Government’s summary intervention in water conservation orders. Actually, some really fundamental changes to democracy and to conservation in the Canterbury region have been undertaken absolutely without due process, and absolutely without the involvement of the people who are affected by those decisions. Again, that was entirely unnecessary.
I will conclude by repeating that the Green Party will vote for this bill, but we extend our hope that the Government will change its tradition in relation to Christchurch and Canterbury to ensure that in the steps that follow in the rebuild of Christchurch and in the rebuild of Christchurch people’s lives—in which this bill plays a small but significant part—the Government will begin the process of inclusion of the people affected by its decisions, and begin the process of democratic engagement with the people of Christchurch over the decisions that affect them. Thank you.
BRENDON BURNS (Labour—Christchurch Central) Link to this
I will pick up a couple of the points made by our Green colleague Kevin Hague in relation to this Taxation (Canterbury Earthquake Measures) Bill. It is, and has been, a bipartisan bill, and appropriately so. When I talked about Canterbury in my past address on this bill to this House, I did not acknowledge that Canterbury extends north to the Kaikōura electorate and south to the Rangitata electorate, and that people as far afield as those electorates have been affected, as well as those of us who live in Christchurch or on its periphery.
But I will pick up on a point, particularly with Minister Kate Wilkinson in the House. I know that it does not pertain to her particular portfolio area, but it is a concern that has come through to me just this week in a parliamentary question. It relates to the earthquake subsidy. Of course, this bill will support those who have suffered through the quake, so that their eligibility for Working for Families is not affected and so that they do not have to pay tax on donations received from employers. But obviously the big element of Government support to those in employment has been the earthquake support subsidy, which I acknowledge the Government commenced quickly. I think it was an initiative driven by both the Canterbury Employers’ Chamber of Commerce and the Canterbury trade unions, and it kicked in quickly and generously. Figures back to me this week from Minister Bennett say that in the first phase of the subsidy, which began on 22 February and went through to 4 April, 46,607 employees and 8,020 employers were represented and supported by that subsidy. There was an interim period of a 2-week extension from 4 April, which brought in a smaller number, but we now have what appears to be—unless there are announcements pending—the final phase of that. At this point, as of 9 May, 660 employers—from that peak of 8,020—and 3,300 employees have been granted a second round of subsidy.
The point I will make is that one of the conditions of that second or third phase of subsidy, in effect, is that an employer needs to show that his or her business is viable before employees can receive the subsidy, and the business needs to be shown to be viable beyond 6 weeks. I guess the concern for me, as the MP representing Christchurch Central, with all of the central business district, is that I would expect that many of the affected businesses, and those most likely to benefit from the subsidy, would be businesses within the red zone. Of course, for some of them it is not just a question of needing to be viable beyond 6 weeks; some of them will not get access to their businesses for 6 months, or more. I just wanted to see whether a Minister might pick up on that, and give us any assurance about whether anything further is coming, and whether that is just a technicality that might be able to be overcome in individual circumstances. I have, for instance, a bar owner in the central business district who is very keen to keep his key staff employed. He wants a little bit of help to keep that going, but does not know when the bar will be able to reopen. It is my view that if the Government can step up on an individual basis to assist a business like that, it will help to keep people in jobs and the cost will be met in a way other than through unemployment benefits.
I will take members through a kind of audio tour, if you like, of the red zone of Christchurch, because on Monday a number of MPs from Christchurch went for their first visit, for several weeks at least, into the red zone. We went down through Armagh Street, past buildings that even some non-Christchurch members would recognise, which now have major question marks about their future, including high-rise buildings such as the Forsyth Barr building, which is a 20-storey building. It has a big question over its future. The PricewaterhouseCoopers building, I think, from the indications, probably will come through. We went through to Cathedral Square, where there is the Regent Building, known to some members who have visited Christchurch as the building that housed the aquarium, and also the Holy Grail Sports Bar at one point; it might be known to some other members for that purpose. There is a major question mark about that building.
No, I do not want to name members at this point, but they will know that bar, I am sure. The BNZ building on the corner of Hereford Street has major question marks upon it. Interestingly, two heritage buildings that have had been earthquake strengthened came through well. The first is the Heritage Christchurch Hotel, which used to be opposite my former electorate office. That office was one of a number of electorate offices I have lost—[ Interruption] I have lost only two electorate offices. The third one, I am very pleased to say, is now on the corner of Fitzgerald Avenue and Bealey Avenue, which is a very prominent site. The hotel, which used to be the Government Buildings, had been earthquake strengthened and has come through with very little damage. I think it is a signal, in the rebuild of Christchurch, that heritage buildings where strengthened should be able to play that part. The second building is the former Chief Post Office and that has come through very, very well. Clearly, buildings without that amount of strengthening—as, indeed, our dear cathedral—have not come through so well.
We went down to the Cashel Mall area. The Ballantynes building had come through pretty well. Ballantynes is going to be at the heart of the Cashel Mall Re:Start programme, which is the initiative to get a part of our city reopened by Canterbury A and P show weekend, by the end of October into the first week of November. It is being driven by the Central City Business Association, headed by Antony Gough and Paul Lonsdale, who are doing a fantastic job on behalf of the inner-city business groups. They were working with the Canterbury Earthquake Recovery Authority to get that going, as an early symbol of the rebuild of Christchurch. But we actually went left rather than right on Cashel Mall and up past some of the shops towards the Hotel Grand Chancellor. The Hotel Grand Chancellor, again about a 20-storey building, is definitely coming down. Although the options were still being weighed up, the signals are that they will be taking a more traditional route to bring it down. We may be looking at a 12-month period to bring down that major building at the heart of our central business district—12 months. High Street and Lichfield Street, one of the cultural precincts of our city, had extensive damage. A number of buildings had already gone.
One of the sombre impacts for me, of the tour, was to see cleared sites where buildings had been felled and the rubble has gone. It is getting to the point where at times one has to look and think what on earth was there. The point about that is that the schedule of buildings to come down already extends to 900 buildings in the central business district, and I think we can expect well in excess of a thousand to come down. That, if one thinks of the size of our city centre is a huge, huge tally, and underlines the importance of that Budget earthquake recovery funding of $5.5 billion for the rebuild of our city. Just concluding my audio tour, other members may know the Holy Trinity Church, a base for the Pasifika community, in particular. That has already gone. It was identified as probably the most damaged building. It had already experienced earthquake damage and a fire, prior to February. That has totally gone, apart from the foundations. Dorothy’s Boutique Hotel will be an institution known to many members of this House, now known as Beaufort House. It has sustained moderate damage, and there is a question mark on whether it will be rebuilt.
We want to keep Dorothy’s. I am absolutely with my colleague the member for Port Hills on that, but it has sustained considerable damage. We went around the corner of Latimer Square through to the Harcourts Grenadier building—a modern building. That has been earmarked for demolition. The Council of Trade Unions building also has a major question mark on it. It has slumped about half a metre in one corner. We came back down through Gloucester Street and saw that the TVNZ building had already been completely felled and demolished. So that sort of completes the picture as part of the central business district.
That leads me to the Earthquake Kiwi Bonds put in place in the Budget. I acknowledge and applaud that contribution. It will be important for the rebuild of our city. I had an email tonight from one of the members of the Interests in Conserving the Identity of Christchurch group, which I chair. Nicky Wagner is another member of that group. One of the members noted there is nothing in the bonding structure to assist the private sector with its rebuild programme. I think there is an assumption that the private sector insurance will be sufficient. The word is that that is not likely. So maybe that issue needs to be given some further consideration, as we move towards the rebuild of Christchurch.
RAHUI KATENE (Māori Party—Te Tai Tonga) Link to this
The Māori Party is committed as part of the Government, along with mana whenua, Ngāi Tūahuriri and Ngāi Tahu, to rebuild Ōtautahi in all its dimensions. As such we welcome these amendments to the tax law in order to support recovery and rebuilding of Ōtautahi. We commend this bill to the House.
NICKY WAGNER (National) Link to this
I rise to support the Taxation (Canterbury Earthquake Measures) Bill. As a one-eyed Cantabrian and someone who has lived in Christchurch all my life, I am delighted that the Budget put the recovery and rebuild of Canterbury right at its centre. The Prime Minister had promised us that the rebuild of our city and our province would be one of the Government’s most high priorities, and through Budget 2011 he has delivered on that promise. He said the Government would do what was needed to make the rebuild happen over the coming weeks, months, and years. He is doing that. He said he knew that it was a huge task and that we need to have ongoing patience and tolerance from all Cantabrians, but together we will get it done. And we will. It is going to be a long, hard slog but we will get there, especially now that thanks to Budget 2011 we have $8.8 billion in the kitty. That is 8.8 billion reasons to feel secure about the future of our province.
This bill is needed to amend tax legislation so that people who so generously donated goods and services to the people of Canterbury do not create a tax liability. In the days and weeks following the earthquakes, so many people donated so generously to Canterbury. They donated to the people they knew, and they donated to the people they did not know. They donated to their neighbourhoods; they donated to their employees. I do not think even one of them thought about a tax liability coming out of that. The Canterbury earthquake of 22 February was the first national civil defence disaster in our country. The people of New Zealand, and also people internationally, responded magnificently. This bill will make sure that the people of Canterbury get the full benefit of that generosity.
The main features of this bill include an exemption so businesses will not have to pay tax or gift duty on trading stock that they donated. It also exempts from tax, welfare contributions provided by employers to their employees. There are numerous stories of what employers supplied; things like washing machines, food, and places to have showers, and generally supporting each other. But the bill also covers two further matters. It extends the redundancy tax credit to 30 September 2011 and provides the Commissioner of Inland Revenue with the power in emergency situations to exclude certain income from counting for Working for Families entitlements purposes. They are all good common-sense amendments, and I believe that every New Zealander will support them.
Over the weeks and months since the earthquake, enormous amounts of goods and services have poured in to our city. Just last weekend I visited a New Brighton hall where volunteers from the Buddhist Compassion Relief Tzu Chi Foundation delivered hundreds of welfare packages. These packages consisted of blankets and personal necessities, such as shampoos and soaps, and the package also included a blessing from Master Cheng Yen. They were also given a debit card with $200 credited to it. It was fantastic. The volunteers gave out hundreds of these packages. The changes in this legislation will mean that very, very generous gifts like these will be tax free.
The cost of the Canterbury earthquakes is enormous. It is estimated at about $15 billion, which is about 8 percent of our GDP. It will probably be one of the most expensive disasters the world has ever seen, and a huge commitment for a country the size of New Zealand. Putting that into context, the recent devastating earthquake in Japan is equivalent to about 3 to 5 percent of Japan’s GDP. The cost of the earthquakes is too big for Christchurch residents to manage alone, but it is manageable within the Government’s nationwide fiscal programme. The people of Canterbury really appreciate the support of all New Zealanders who have given so generously to us through the Budget and understand that this bill is just another way of them showing their support. I commend the bill to the House.
STUART NASH (Labour) Link to this
I suppose that over the next 4½ hours we will hear in the House how good the Taxation (Canterbury Earthquake Measures) Bill is, and what a magnificent job our Christchurch MPs are doing. We will also hear that this is important legislation. In a way it is ground-breaking legislation, certainly from a tax perspective. [ Interruption] Thank you very much. It took about 2 seconds.
I know we cannot refer to someone not being here, but perhaps during the Committee stage the Minister could let us know whether this bill is the first piece of tax legislation to be brought in for this sort of event. I suspect it is, because, as the last speaker alluded to, the earthquakes are, in fact, the first national disaster we have had in the country’s history. I suspect that back when the Napier earthquake occurred, there was no such thing as a national disaster. It is good to see the House rallying around this legislation. It could have been here a little bit earlier. Certainly, Labour and National—in fact, every party—wanted it here a little bit earlier, except the Greens, I think, who may have blocked it at the Business Committee, but that is OK, because it is here now. Better late than never, I suppose.
There are a couple of things I will talk about. I will not take a long call on this; there is plenty of time for that. I want to talk about the policy problem.
There is no doubt that the immediate provision of goods to those in need was of vital importance, and we talked about that before. I think most speakers have alluded to the fact that it just had to happen. People did not sit down, and they did not consult a tax accountant or a lawyer. They knew they had to get out there and make it happen for the people of Christchurch as soon as possible. But the problem we have is that the existing laws do not support that sort of behaviour. They do not encourage a donation or supply of goods for less than market value—but let us say a donation—to assist people in Christchurch who have been affected by the earthquake. In fact, existing laws are designed to deal with manipulation by business, not the goodwill of business. That is one of the great things to come out of the Christchurch earthquake, and, again, many speakers have talked about it. People rallied together in a way that not only brought a city together but brought a nation together for a small time. As a result of the existing law dealing with the bad side, with manipulation, it does not adequately deal with the donation of trading stock, particularly in circumstances such as the Christchurch earthquake. I suppose it is an unintended policy outcome due simply to the fact that when tax legislation was designed, the drafters did not contemplate the fact that people would be giving away stock to victims of such an extreme national disaster. So that is part of the policy problem.
As has been mentioned, currently, under the law that exists at this point in time, goods donated to victims of the Christchurch earthquake are not eligible for the donations tax credit, or the company donation deduction. The effect of the section in the Income Tax Act that governs this issue is that people donating in response to the Christchurch earthquake will have to file a tax return for income tax purposes for the full market value of that trading stock. We are posing some questions about that, and it will be very interesting to get the answers to those questions in the Committee stage. The sorts of questions this issue brings up include whether those businesses will have to file a tax return, or any form of return, that deals with the stock that has been given away—how they will have to account for it, I suppose. The gift of trading stock, or selling it down at less than market value, constitutes a gift under the Estate and Gift Duties Act. Even though we are getting rid of gift duty—probably before the election, I suspect—under this Act, during this time, one will still be liable for gift duty.
This was what we were talking about before. There was just not the time to consult a tax accountant and to get one’s affairs in order. I do not know at what point the businessmen and businesswomen suddenly said: “Hell’s teeth! What am I going to do about this?”, but at some point it did happen, and the Inland Revenue Department received a number of calls about it. In a way, this bill is cutting out a whole lot of red tape, because if the Inland Revenue Department had insisted on those business people accounting for every single bean, then there would have been problems, because I suspect that a lot of businesses had no idea. I understand that a lot of businesses have lost a lot of their records, so to go back and stocktake would have been close to impossible. In fact, there was no realistic way to deal with this issue. So that is a question we will pose in Committee.
This is very good legislation because it deals with an extreme event in a way that I think the vast majority of businesses would like it to be dealt with, and, I think, every New Zealander would expect it to be dealt with. We absolutely support it and we commend it to the House. Thank you.
CHRIS AUCHINVOLE (National—West Coast - Tasman) Link to this
It is a pleasure to rise in support of the Taxation (Canterbury Earthquake Measures) Bill. Yesterday the Minister of Finance, the Hon Bill English, delivered a responsible Budget. It is a growth Budget, a Budget towards better times, and a rational National Budget. This is a Budget that has been prepared in some of the most challenging economic circumstances New Zealand has ever faced. One of the key components in this Budget is the need to get Christchurch back on its feet, and that is what this bill is all about. Rebuilding Christchurch is one of the Government’s top priorities, and that is why we have found $5.5 billion in a Budget where little extra expenditure—other than for education and health—is possible.
The Taxation (Canterbury Earthquake Measures) Bill is one of the things this Government is doing to support the people of Canterbury to rebuild their city. This bill looks at a range of situations where the people of Christchurch could be negatively affected by our current tax laws. Our current tax laws, though robust, were never designed to cope with a disaster on this scale. This is a sensitive, compassionate, and considerate bill.
My colleague Nicky Wagner, the next MP for Christchurch Central, has been working tirelessly with the people of Christchurch throughout their recovery from this devastating earthquake. Nicky often tells me of the extraordinary resilience of the people she has been supporting, and the remarkable examples of people helping each other out. The same can be said of the Hon Kate Wilkinson and Amy Adams, and, indeed, the Hon Ruth Dyson, the Hon Clayton Cosgrove, the Hon Lianne Dalziel, and Brendon Burns. This is not a time to be cute or partisan. Just as on the West Coast we subsumed our political differences at the time of the Pike River disaster, so it is time to do so now in Christchurch and for everyone to work together.
That is what this bill is all about. Let us work together and bring about the best for Christchurch. I will be there tomorrow, for the weekend. The West Coast helped build Christchurch originally and will do so again. I support this bill and all those who are working for the betterment of Christchurch. Thank you.