rawiriri waititi on a orange background surrounded by fruit
You get a tax free broccoli! You get a tax free bottle of milk! But only if the members bill is passed (Image: Getty/Tina Tiller)

KaiMarch 20, 2024

Rawiri Waititi’s member’s bill to remove GST from food, explained

Contributing writer
rawiriri waititi on a orange background surrounded by fruit
You get a tax free broccoli! You get a tax free bottle of milk! But only if the members bill is passed (Image: Getty/Tina Tiller)

This week, Rawiri Waititi’s member’s bill to remove GST from food will have its first reading. Here’s what that could mean. 

What is GST? 

Goods and services tax is New Zealand’s tax on stuff you buy: food, books, spa treatments, cat food, website design, and basically anything else that isn’t your salary or money from investments. 

It was first introduced in 1986, and helped to pay for tax cuts for individuals. Unlike income tax, which is staggered so that people with less money pay a lower percentage of tax, GST is a flat tax. After being increased in 2010, it’s now 15% for everyone. GST includes food, which means that everything you see in a supermarket has had 15% added to the price, which goes to the government. When the Tax Working Group looked at the impact of GST on food in 2018, they found that food and drink contributed $2.6 billion out of a total of $18.7 billion of government revenue from GST. 

a shotting trolledy with a coin in the centre and bright green bubly background
GST keeps getting applied to food (Image: Tina Tiller)

What is exempt from GST?

There are already GST exemptions for a few things. Exports, including exported food, aren’t taxed as GST as it only applies to sales in New Zealand. Financial services and precious metals also don’t have GST added. 

What do other countries do? 

Several comparable countries to New Zealand have forms of GST exemptions for food, including Australia, Canada, Mexico and the UK. Sometimes these countries call it VAT (value-added tax) instead, but it’s basically the same thing. These are applied in different ways: mostly the exemption is for food classed as “essential”, so no one is getting discounts on luxury chocolate. 

This can make things complicated. For example, in Australia, a bread roll sold in a supermarket is GST-exempt, but a bread roll in a cafe would have GST added; biscuits are taxed, but a rusk for a teething baby to suck on isn’t. In the UK, cold takeaway food isn’t taxed (something like frozen dumplings you’d take to cook at home), but if you bought those same dumplings hot from the same vendor, you’d have to pay tax, even if you were still eating at home. 

In general, New Zealand’s tax rates, both on GST and personal income, are lower than most other OECD countries. The Tax Working Group’s findings showed that a higher proportion of overall tax revenue is from GST than in most other countries; GST is set at a lower percentage here than most other countries, because New Zealand doesn’t have as many exemptions to their GST regimes.

(Image: Getty, Design: Tina Tiller)

So, what is Rawiri Waititi’s bill proposing to change?

Waititi’s amendment to the Goods and Services Tax Act, which you can read in full here, would “remove GST from all food products and non-alcoholic beverages”. It explicitly cities the regressive quality of the tax, which places a greater burden on those with less money. Not bothering with the technicalities of types of food laid out in Australian law, it simply applies the tax removal to all food, as well as consumer packaging of food that is necessary for the food supply (presumably so it doesn’t make it confusing for businesses trying to separate, for example, tax on cardboard flour packaging from the flour inside). 

Will removing GST really improve outcomes for people in need? 

The issue with removing tax to lower food prices is the same as adding tax which increases food prices: it affects everyone equally, decreasing government revenue and lowering taxes for people with high incomes as well. 

Economists largely panned Labour’s 2023 election commitment of removing GST from fruit and vegetables; their criticisms give a sense of what the impact of removing GST from all food might be. Former finance minister Grant Robertson had previously described the policy as a “boondoggle”. His former adviser,  economist Craig Renney, said that while it was a better idea than National’s tax cuts, which largely give more to wealthy people and homeowners, “there are more direct routes to put money in people’s pockets.” 

People short on food agree: at a community kai night aimed at homeless people in Auckland last month, several people told The Spinoff that they’d like to see food discount or food stamp schemes specifically for low-income groups. 

Despite this, removing GST from food is a popular policy: 76% percent of people supported the idea in a Newshub poll from 2022, and 20,000 have signed Te Pāti Māori’s petition on the issue.  But even though most people like the idea of food not being taxed, it could be hard to identify how much of a price reduction would be due to GST removal; it likely wouldn’t bring the cost of food down by the full 15% it is taxed at now. 

A number of factors go into food prices, which frequently fluctuate; for example, due to different seasons. 

When Labour’s independently commissioned Tax Working Group looked at GST in 2018, they concluded that “removing GST from food and drink would provide a greater absolute benefit to higher income households than lower income households”. This is because higher income people spend more on food – not because they necessarily eat more, but because they are able to purchase more expensive items. 

Empty plate with cutlery and a piece of bread
Removing GST might not mean full plates for the whānau who need it most (Photo: Getty Images)

Who will support this bill? Will it pass its first reading?

This isn’t an issue that necessarily falls along clear party lines, but parties’ previous support of similar ideas can be telling. 

In a press release, Rawiri Waititi said he was encouraging all parties to support his member’s bill through its first reading, regardless of political alignment. “On some kaupapa, parties must put the rubbish politicking aside and come to a mutual agreement for the wellbeing of our mokopuna,” he said. “The coalition said they’d do something to address the cost of living. This bill is an opportunity for them to have a positive impact after a terrible start to their governing term.” 

Te Pāti Māori and their MPs will support the bill, since it comes from their party. 

The Green Party was not supportive of Labour’s proposed removal of GST from fresh vegetables. In an interview at the time, MP Chlöe Swarbrick (now party co-leader) said that the Green Party was focused on “tax justice” which GST removal didn’t address. 

The Labour Party campaigned on a partial version of the policy in 2023, suggesting that GST should be removed from fruit and vegetables. The policy, which had also been tried in 2011, didn’t seem to capture the imaginations of voters; after being widely criticised for being impractical, it faded into the background of the election campaign. While the party hasn’t made a definitive statement about supporting the bill, Labour-aligned commentator Shane Te Pou has urged them to do so. “If Labour votes against this bill, a lot of Labour supporters will be very unhappy and they will not forgive or forget.”

More Reading

    New Zealand First campaigned on removing GST from food in the 2014 election; however the party was in opposition after the election and has not campaigned on the issue since. 

    While the Act Party is generally in favour of removing taxes – “providing tax relief to income earners” is one of its key focuses, according to its coalition agreement – they will likely not support the bill, as they were strongly supportive of GST when Labour announced their fruit and vege policy last year. “The simple, universal nature of GST is what makes it such an effective revenue collector, where would you stop with the exemptions?” David Seymour said in a press release. “There’s nothing good about this policy,” he said in a Newshub interview. 

    Because National has its own “tax relief plan” even if there are questions about its costing, they are unlikely to support Waititi’s bill; lowering the taxes they have already said they want to do is already creating problems for Nicola Willis. 

    ‘He mea tautoko nā ngā mema atawhai. Supported by our generous members.’
    Liam Rātana
    — Ātea editor
    Keep going!
    A tino rangatiratanga flag coming out of some macadamia nuts.
    Macademias can be grown in New Zealand Photos: Getty Images / Design: Tina Tiller

    KaiMarch 20, 2024

    What do macadamia nuts have to do with kaitiakitanga?

    Staff Writer
    A tino rangatiratanga flag coming out of some macadamia nuts.
    Macademias can be grown in New Zealand Photos: Getty Images / Design: Tina Tiller

    After 35 years of trial and error, Tōrere Macadamias have turned the Australian nut into a platform for enacting Māori sustainability. 

    If you were asked about kai Māori, where would your thoughts drift? Probably kūmara, kaimoana, hāngī, fried bread and boil up. Definitely not macadamia nuts, which originated across the ditch. But Tōrere Macadamias, run by Ngāi Tai uri, are a world leader in their industry. They’ve used this Australian nut as a platform to become a successful business and to promote kaitiakitanga within the agricultural sector, Aotearoa’s most polluting industry.

    Tōrere Macadamias features in season two of the Whakaata Māori show Home, Land and Sea, which explores how indigenous farming can be different and more sustainable than conventional agriculture. Producer Nicola Smith calls kaitiakitanga the guiding principle binding together the diverse tāngata whenua ventures featured in Home, Land and Sea. “Māori fishing, Māori farming, and farms led by whānau Māori all focus on sustainability and creating a resource for generations to come,” explains Smith. Other episodes of the show explore Māori fishing, honey, kūmara, truffles and whitebait operations. 

    Vanessa the founder of Tōrere Macadamias surveys one of her trees.
    Vanessa Hayes, founder of Tōrere Macadamias, surveys on of her 1,500 macadamia trees. (Photo: Supplied)

    “In 1983, my plan was to grow something on the land that wasn’t going to be detrimental to the land or the area,” says Vanessa Hayes, Tōrere Macadamias’ founder. They planted their first tree 35 years ago, and now they run the biggest macadamia orchard in Aotearoa: an 11-hectare ngahere with 1,500 mature trees and a nursery. But their orchard isn’t just country-leading, it’s world-renowned. Rui Shi, a top macadamia expert, claims Tōrere Macadamias are the world’s largest and tastiest. Despite its success, Tōrere Macadamias wants to double its operations. 

    Hayes’ son Walter Rika manages this whānau-operated business. His nephews and nieces help out, and his kids will too when they’re old enough. “I probably planted my first tree when I was about 11, and I got this connection with the place – it’s home,” he says. The orchard is located on their ancestral whenua, where an ancient pōhutukawa sits. “The tree itself was used [as a waka mooring] by our whānau many, many years ago when this area was covered in seawater”. More recently, the whenua (placenta in this context) of Hayes’ mokopuna was buried beneath the rakau.

    Some of the Tōrere Macadamias crop. There are hundreds of macadamias nuts in the photo.
    Some of the Tōrere Macadamias crop. (Photo: Supplied)

    Caring for their ancestral land makes Hayes’ whānau kaitiaki, tying Tōrere Macadamias into Home, Land and Sea’s sustainability theme. “I believe that macadamia is good for Māori to get into because it’s healthy, it’s organic, it’s a sustainable crop,” says Hayes. She spent decades determining the perfect macadamia varieties for New Zealand’s climate. Trial and error is critical to kaitiakitanga, which is based on empirical evidence, not just lab science. Hayes’ empirical methods identified six macadamia species perfect for Aotearoa. Another example of kaitiakitanga in action at Tōrere Macadamias is their sponsorship of a PhD student studying potential uses of their husks and shells to limit waste and greenhouse gas emissions (from decomposition). 

    By employing kaitiakitanga while growing macadamias, Hayes’ methods are informed by mātauranga Māori. For example, Tōrere Macadamias’ work is dictated by the ebbs and flows of the maramataka, which Hayes sees as key to their success. “Every month, we graft for 10 days leading up to and just coming off the full moon,” she explains. But another key kaitiakitanga practice which is often overlooked is its social obligation to bring people together for their, and the land’s, benefit. Hayes, however, doesn’t ignore this tikanga, as she founded the “Mātaatua Macadamia Collective” to enable other tāngata whenua to also grow the crop. 

    A field on a whānau Māori block which the Mātaatua Macadamia Collective is planting.
    A field on a whānau Māori land block in the Ruatoki valley just outside of Te Urewera in Tūhoe-country. Here the Mātaatua Macadamia Collective can be seen planting macadamia tree saplings. (Photo: Supplied)

    Mātaatua Macadamias Collective chairperson Hemana Waaka, who now grows the crop in Ruatoki, said, “What’s important to me is the wairua of the land, the whakapapa of the land, look after your land and who better to look after your land than yourselves.” Hayes outlined that the collective currently has 65 combined hectares of orchards, but their 2029 goal is 500. Fifteen land trusts are ready to go. Many were drawn to macadamias over environmental concerns – like the Akurangi whānau, who ran out of water for traditional farming. As Waaka explains, “Once the tree is in the ground, you don’t have to worry about water.”

    Of all things, Covid-19 spurred the collective’s growth. During the pandemic, “with a lot of Māori coming home through that period, they all wanted to do something with their land,” says Hayes. She is stoked that more Māori are growing macadamias because Tōrere Macadamias alone can’t supply “the lucrative markets that are around in New Zealand. We don’t have enough to supply the chocolate makers, the ice cream makers, the muesli makers, the cereal makers.” 

    Hemana Waaka surveys a semi-mature macadamia tree about his heighton his family's land block at Ruatoki.
    Hemana Waaka, chairperson of the Mātaatua Macadamia Collective, surveys a macadamia tree on his family’s land block at Ruatoki. (Photo: Supplied)

    With the Mātaatua Macadamia Collective succeeding under Hayes and Waaka, the former’s son has a bold prediction. “The future for macadamias, I think it’s going to be looking very bright. I think there’s a lot of potential for our country and our peoples.” 

    Episodes of the second season of Home, Land and Sea come out on Mondays between February 19 and April 1 at 7.30 pm on Whakaata Māori and Māori+. 

    This is Public Interest Journalism funded by NZ On Air.

    Kai