Source: New Zealand Parliament – Hansard
Part 2 Income Tax Act 2007 and Tax Administration Act 1994 amendments commencing 1 July 2024
CHAIRPERSON (Barbara Kuriger): Members, we now come to the debate on Part 2. Part 2 is the debate on clauses 8 to 24, “Income Tax Act 2007 and Tax Administration Act 1994 amendments commencing 1 July 2024”. The question is that Part 2 stand part.
Hon JO LUXTON (Labour): Thank you, Madam Chair. I wanted to discuss in particular the childcare rebate. I find this a very clunky and unusual way of giving supposed relief to families. There’s a number of issues that I want to traverse in my contribution, and questions that I want to ask of the Minister.
As an ex – early childhood teacher and centre owner myself, I’m interested to know if there’s been any consultation with early childhood centres and if this is going to create any additional workload for them—are they going to have to provide a certain type of receipt of paperwork for families that they will need to use to get their rebate from IRD? If I think back to my time in early childhood, parents would often lose their receipt, their general receipt. They found it tricky enough to fill out everyday paperwork requirements within early childhood education (ECE) itself. So you’ve got families who live extremely busy, busy lives—families where both parents often work and one often working two jobs just to make ends meet. And you’re giving them this rebate where they’re going to have to fill out all this paperwork, collect their receipts, and they have to pay for the childcare upfront. So let’s be very clear about that. The money comes out of their pockets straight away; there is no relief straight away. They have to pay upfront, these families who are supposed to be getting relief from this Government. They have to pay money upfront, and we know that early childhood education in New Zealand is some of the most expensive in the world.
So they’re going to have to pay this money upfront, then collect all their paperwork—and they can only do this every quarter—take it along to IRD or send it off to IRD, and await their rebate, which will take some time to come through.
So my question to you, Minister, is how on earth is putting an extra administrative burden on families in order for them to get a rebate several months down the track after they’ve forked out the money that they can barely afford to spend anyway? How can you expect this to be successful? It is just clunky, and I’m interested to know how the Minister sees this is going to be of any real benefit for families other than creating more administration and pressure on families that have busy enough lives as it is.
Hon PEENI HENARE (Labour): Kia ora, Madam Chair. Thank you very much for this opportunity. I stand interested, too, in the same matter of the rebate here. I’m a former kōhanga reo pupil myself; I think the first kōhanga reo pupil into Parliament—just a little something for us. Apparently, the kōhanga reo generation is here—been here for 10 years.
But, look, to the point: the regulatory impact statement is quite clear in talking about the participation rates of Māori, the cost there is, and the administrative barriers for Māori and Pacific families. But I want to focus on Māori as it’s the one I know about the most. You’ve seen with their tamariki o te kōhanga reo: the burden on them to continue to receive a rebate in this respect is cumbersome, it’s onerous, and will only further reduce the uptake on Māori for putting their tamariki into ECE. The regulatory impact statement (RIS) makes it very, very clear: it says there that it “will provide a reduced benefit to Māori and Pasifika families due to these groups being less likely to pay for childcare, either due to ECE subsidies covering the costs already, lower ECE participation, or greater participation in informal/non-cash-based childcare.”
This is a huge blow to many of the working families out there who want to send their tamariki to kōhanga reo. It’s already difficult enough to get tamariki into kōhanga reo, and now they’re being asked to front up with these costs. But then there is the administrative burden of going along to make sure that they receive their rebate.
The next part to that is what does this mean, and it’s not quite clear and I’d like the Minister to explain to us what this means when it comes to kōhanga reo themselves supporting families to administer this particular rebate. That isn’t an answer that’s clearly provided for in the RIS, nor is it in the bill, so I’d really appreciate it if the Minister could help us all understand what this means and what does the burden mean for the ECE provider. It says something in the bill there that the forms have to match up to the IRD. It says that in Part 2, clause 41C—yep, I think that’s the one—and it says that the ECE provider has a little bit of work to do to make sure that they match up with the IRD forms. And I’m wondering: (1) what does that cost our ECE providers, and, in particular, kōhanga reo, who already struggle for money; and (2) will that then be passed on to families in increased cost for families who wish to put their tamariki into ECE?
So those are the questions I have for the Minister, and if he can explain what material impact that has, in particular, on Māori families, and whether or not, in their decision making, the Minister and the Cabinet considered how this will impact Māori and whether or not their uptake of ECE will rise or fall. It’s clear in the information in the RIS, and the feedback that we’re getting already from the kōhanga reo sector, that it will materially impact our families in the community.
Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. Just in response to those questions: the FamilyBoost policy goes actually to the heart of what the last member was referring to in terms of the implications on families across the country, and is significant as a result of the early childhood education fees in which they need to incur. In comparison to the status quo—i.e., doing nothing—this Government and this bill is implementing the ability for families to receive 25 percent of those ECE costs, up to a maximum of $150 per family per fortnight for those that are earning up to $180,000—to have the ability to get that rebated back. Compared to the status quo, that is a significant benefit, and that money, irrespective of the background of those families, will be available for them to use against the impacts of the cost of living.
The regulatory impact statement at clause 29 refers clearly to say that Māori and Pasifika families are disproportionately impacted by the implications of ECE costs, and those families will benefit through the implementation of this policy, and that is a good thing in comparison to the status quo.
In regards to Jo Luxton’s questions in regards to some of the conversations around how the rebate will work and language around that, again, the regulatory impact statement does outline some of the considerations around the way in which the ECE sector was engaged and was discussed, and that engagement was undertaken, acknowledging that there are considerations around Budget secrecy. But at the end of the day, the objective for this coalition Government is to get that benefit into the hands of hard-working families who have children in ECE, as far as practical, and the considerations and the balances that my department and IRD need to draw is ensuring that we’ve got an ability to ensure that those who are receiving those rebates will receive the appropriate amount of revenue back from that, and ensure that we’ve got a good process in regards to compliance as well, to ensure that who is getting the money should get the money. And I think we’ve found that balance between the speed at which we execute and making sure that we ensure that the money goes to those who need it most.
