Parliament passes the wrong law in an afternoon of urgent legislation



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The New Zealand Parliament is famous for being able to pass laws quickly in a crisis.

But Thursday could have moved too fast, after a mistake meant that the wrong legislation was introduced in Parliament and then passed in a matter of hours, and a billionaire loan scheme was accidentally signed into law.

The bill was intended to “throw a lifeline” at small and medium-sized businesses and was passed at all stages of the legislative process in one afternoon.

A bill like this would generally take six months to become law.

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In a statement released with the bill, Revenue Minister Stuart Nash said it included a loss-of-return regime and to give more flexibility to companies struggling to meet their tax obligations due to Covid-19, among other things.

Basically, it gave effect to the tax changes that the Government announced during the closing.

But eagle-eyed tax enthusiasts saw that the bill did much more than that: it allowed the IRD to lend money to small businesses.

Under the eligibility criteria announced by the government today, the scheme could mean loans worth $ 2.5 billion only to sole traders. The plan also allows loans to companies that employ less than 50 employees, which means the actual cost of the plan could be even higher.

Finance Minister Stuart Nash introduced the bill Thursday.

Ricky Wilson / Things

Finance Minister Stuart Nash introduced the bill Thursday.

Establishing the IRD as a state-backed lender is obviously great news for companies, and there was some confusion as to why the government wouldn’t announce such a big change, especially for companies that would have to use it.

The approved bill gave the IRD commissioner the ability to issue loans, ensured that those loans were not accounted for as taxable income, and that if a borrower subsequently fails, the Inland Revenue would forgive the outstanding balances on the loans.

ACT party leader David Seymour noted in the bill’s third reading that the plan sounded “fantastic,” but joked that the government had not communicated it.

On Friday, Finance Minister Grant Robertson released a joint statement with Nash that formally announced the scheme, including details of how it worked.

Robertson later clarified what had gone wrong and said the error was the result of a mistake made by the Parliamentary Advisory Office, which is responsible for drafting the legislation.

“The bill presented by the Parliamentary Council Office and presented in the House was incorrect, and the Parliamentary Council Office apologized for that,” said Robertson.

He said that the Government always had the intention to advance the loan scheme.

“All the legislation did was create the enabling framework for that,” said Robertson.

The bill was supported by MPs from all sides, interested in passing legislation that helped companies respond to Covid-19, but the bill that those parties saw was not the one that came up and became in law.

The cabinet had to meet urgently that night to retrospectively pass the law, as it had not yet done so.

A preliminary version of the bill, seen by Stuff, does not include the loan guarantee.

Finance Minister Grant Robertson said the government had always planned to implement the scheme.

Kevin Stent / Things

Finance Minister Grant Robertson said the government had always planned to implement the scheme.

Robertson said he would not characterize the legislation as “incorrect”.

“This is something we always intended to do, the legislation simply created the enabling framework for that,” said Robertson.

“A lot is being done with a lot of speed right now, every now and then there will be a mistake,” said Robertson.

National Finance spokesman Paul Goldsmith questioned Robertson’s version of what went wrong.

“Robertson’s story does not seem to coincide with the events, which sent us a version of the invoice that did not include the small business cash flow scheme with the clear message that this was the invoice being entered.

“The minister’s speech did not refer to the scheme, the employee told us that the presented bill had reference to the scheme.”

At some point, the bill with the included scheme was approved and then presented.

Goldsmith said he broadly supports measures to help small businesses, but said the bill could have been done with a few days on a select parliamentary committee.

ACT’s David Seymour said the episode had shaken his faith in the government

“In all fairness, we all subscribed when we gave permission for the bill to be passed urgently and voted in favor, yet we did so with great faith in the government and now it appears that our faith may have been lost,” said Seymour.

He said parliamentarians had operated a “high trust” model with the government so far, by backing up many of their decisions during the Covid-19 crisis, but the error meant they would have to move to a “low trust” model. .

Like Goldsmith, he agreed with the additional support for small businesses, but said the loan scheme could have been done with a few days on a select parliamentary committee.

“We will have to be sober towards recovery.

“We were lucky this time, but we can’t afford to do this again,” said Seymour.

The Parliamentary Council Office has begun a review of the issue.

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