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Source: New Zealand Parliament – Hansard


Mr Speaker took the Chair at 2 p.m.




Question No. 1—Prime Minister

1. TODD MULLER (Leader of the Opposition) to the Prime Minister: When she said yesterday that the Government was “using the tax system to get cashflow to small business”, what did she mean by that?

Rt Hon JACINDA ARDERN (Prime Minister): Talofa lava, Mr Speaker. I thank the member for his question and the opportunity to talk about our support for small business. I stand by my full statement from yesterday which was, “I notice other members of his party have been quite dismissive during this question time of using the tax system to get cash flow to small business, so perhaps not everyone is of one voice. But again, the tax loss carry-back scheme, $3.1 billion; tax loss continuity support, $60 million; tax deductions for assets, again a massive part of our first tax package through Minister Nash. We raised the provisional tax threshold. We allowed depreciation on buildings and we also have allowed loans for R & D”. The overriding point here is that I agree with the member that small businesses need to be supported at this time. This is what we’ve been focused on, whether it’s through reduction of tax liability, whether it’s through refunds, whether or not it’s through the wage subsidy, or whether or not it’s through loan schemes, we’ve actually delivered all of them.

Todd Muller: How does the tax loss carry-back scheme help a car painter in Christchurch with one employee who last year earned $100,000 but drew this as a salary, and therefore did not declare a profit?

Rt Hon JACINDA ARDERN: We’ve never assumed that any single one of our initiatives will solve problems for every small business, which is why we have introduced a range of products. We’ve included, obviously, what I’ve announced today is a very well-used interest-free loan scheme. The wage subsidy scheme would allow that business owner to claim not only for themselves but for their employee as well. So one thing is not the solution, but many products have been.

Todd Muller: Could I repeat, how does the tax loss carry-back scheme help a car painter in Christchurch with one employee who last year earned $100,000 but drew this as a salary, and therefore did not declare a profit?

Rt Hon JACINDA ARDERN: As I just responded to the member, one single product is not necessarily going to help that small business owner, but in the same way that the GST claim system that that member has had as his policy wouldn’t necessarily help every business. For example, a business with under $60,000 in turnover wouldn’t register for GST and would be excluded. So again, I say to the member that it takes a range of responses, and that is what we have produced as a Government.

SPEAKER: Before the member carries on, I’d like to ask members just to settle down a little bit, and I’m looking, at the moment, at my colleague from the West Coast, who seemed to sort of outperform all others with regard to volume, but as he did so, he seemed to stimulate a response, which was not helpful.

Todd Muller: What advice has the Prime Minister received on the likely uptake of the tax loss carry-back scheme from small businesses?

Rt Hon JACINDA ARDERN: What I can report on is what’s happening in real time. It has so far released funds worth $71 million. Again, that won’t necessarily be entirely for small to medium sized enterprises (SMEs), and we’ve been very open about that. That is why we’ve had a range of products to answer the differing positions of businesses at any given time. So it is running for a year. That won’t be a full indication of the uptake, but it is one package that I know is making a difference, and was recommended, as I understand, by BusinessNZ as a useful package.

Todd Muller: Of the $71 million she just quoted, how much has gone to small businesses?

Rt Hon JACINDA ARDERN: Whilst I don’t have a breakdown, 1,484 customers have opted in so far into the loss carry-back scheme. I think, though, that if we get to the nub of the issue, the member and I actually agree that we need to be supporting small business. I’m not entirely clear on whether the member supports the wage subsidy scheme, which I think has been incredibly valuable, and I have a range of quotes from correspondence from SMEs saying why. But even with a GST rebate system, even that has people who will not benefit from it. We need a range of responses. I’m happy to consider ideas from the member if he has extra ones.

Todd Muller: Why will the tax loss carry-back scheme benefit small businesses, given that very few small businesses report a taxable profit?

Rt Hon JACINDA ARDERN: And some small businesses won’t even have an income of $60,000 which requires them to register for GST, so therefore his scheme may not help them either. Again, as we’ve continually argued, the loss carry-back scheme is one part of a range of packages. We’ve also changed the provisional tax threshold, which means that there are, from memory, 95,000 taxpayers who won’t have a tax liability for provisional tax. Of course we have the lone scheme and the wage subsidy scheme; we’ve also increased the low-value asset write-off threshold, which, again, reduces the tax liability for a number of small businesses. There is not one answer; there are many answers.

Todd Muller: How quickly will the tax loss carry-back scheme actually get the money back to businesses?

Rt Hon JACINDA ARDERN: As I’ve already said—keeping in mind we’ll probably see another flush through to August, as well—$71 million has already been paid out.

Todd Muller: Of that $71 million, can she please confirm to the House how much of that has gone to small businesses of New Zealand?

Rt Hon JACINDA ARDERN: I already told the member that I do not have a breakdown, but there’s been a payout of 1,484 customers. I can give a breakdown, though, of the Small Business Cashflow Loan Scheme: the largest number of applications, about 45 percent of the total, are from individuals and sole traders where there is just one employee; organisations with two to five employees is the next most frequent group of applications. The member also knows from my answers yesterday that when it comes to the wage subsidy, by far and away the largest number of benefactors have been small business and sole traders. It has made a significant difference and I have a large amount of correspondence to back that up.

Todd Muller: What is her philosophical objection to actually taking up the National Party idea of a GST cash-back scheme that delivers cash now for businesses who are broken and crying out for help?

Rt Hon JACINDA ARDERN: The point that I would make here is that, actually, to even reach the top end of what the member has proposed we’d be able to access as a rebate, a business would have to have a spend of over $767,000. Again, I’ve also, in asking IRD—[Interruption] Mr Speaker, I’m trying to give the member a considered approach—about this as an option, their response has been that it would be relatively hard to administer and may not be as quick as some of the options that we have put out, and not nearly as easy to calculate, and also, because of the thresholds, it wouldn’t necessarily cover some smaller operators. For me, there shouldn’t be politics in us considering these ideas. We have considered a range of options; we just haven’t fallen on this one.

Hon Chris Hipkins: Supplementary question.

Rt Hon Winston Peters: Supplementary question.

SPEAKER: No, before we have any of that I will remind members who are interjecting from the gallery, they have an absolute right to do that, because the gallery is currently regarded as being part of the House—but, Mr King, they have to be in order.

Rt Hon Winston Peters: Can I ask the Prime Minister as to whether she’s received any reports of the likelihood of some future Government hitherto in the enthral of big business looking after small business?

Rt Hon JACINDA ARDERN: I do find it interesting that there’s an argument against some of the proposals that we’ve put forward, including, it seems, the wage subsidy scheme, which has from even, for instance, the Hutt Valley Chamber of Commerce, 68 percent of businesses surveyed reported that they were able to retain 100 percent of their staff and they considered it the most helpful initiative to local businesses.

Hon Chris Hipkins: Does the Prime Minister believe that the 86 percent of New Zealanders who support the Government’s economic response to COVID-19, including the tax changes that she’s outlined, must be suffering from Stockholm syndrome, as diagnosed by the Opposition health spokesperson, Michael Woodhouse?

SPEAKER: Order! Before you can answer that—oh, I think it’s been turned off now, but my predecessor, Mr Carter, please do not shine your torch in my eye. Thank you.

Rt Hon JACINDA ARDERN: Obviously I disagree with the statements made by Mr Woodhouse, but it is fair to say that we have been listening to New Zealanders and to small businesses. If you take the example of tourism and the number of meetings that the Minister has held, the tourism sector asked us to extend the wage subsidy, so that is exactly what we did.

Hon Stuart Nash: Has the Prime Minister seen reports of this Government’s changes to black hole expenditure rules and revision of loss continuity tax rules that this Government is undertaking that the tax community’s been crying out for for years?

Rt Hon JACINDA ARDERN: Yes, they have been asked for and we have responded. In fact, not only are we implementing them now when it comes to loss carry-back, we are also going to looking at allowing that in the future, and we’ll be undertaking consultation to make that a permanent part of our tax regime.